Given that the US dollar index and especially USD/JPY is tanking while real rates are going lower, gold and silver should be up strongly ATM. Unfortunately there seems to some resistance keeping the metals from heading higher. One factor that I personally believe is playing a part is that the mining indices GDX and GDXJ are at the very end of a year old wedge consolidation pattern as can be seen below. If metals were to REALLY rally, it would probably lead to a massive bullish break out for the miners. In case some entities aren’t ready for that just yet, the metals must be kept in line…

 

GDXJ

GDXJ (At the end of a massive wedge)

 

Two reasons for me personally believing the break out has a good chance of happening relatively soon is that I have a BUY signal on Barrick Gold and First Majestic produced from one of the top trading strategies that my machine learning algorithm produced. The Barrick Gold strategy has had a 88% success rate over the last two years, which flashed BUY just two days ago. The First Majestic strategy has had a 71% success rate during the same time period.

If these two “flagship” miners are signalling an up turn, I would guess that it bodes well for the mining stocks overall. Nothing can be taken for granted and we should soon see if a bullish break of the wedge pattern is indeed in the cards.

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