How To Recognize The Long-Awaited Breakout In Precious Metals

The patience of gold bulls is seriously tested after this 4 year bear market. But are precious metals preparing for a huge breakout?

The next chart, courtesy of ShortSideOfLong, provides some answers to that question. In particular, it shows the trendlines in a simple and clear manner, for gold, silver and miners (mid-tier and senior miners represented by GDX in red and junior miners by GDXJ in green). Based on those trendlines, it seems that none of these assets were able to break out so far. In case we would see a break through the trendlines, ideally in all of those assets together, then we can be quite confident that we finally have a trend change.

Precious-Metals-Bear-Market-2011-2015

The chart provides almost exact targets to watch for a structural breakout:

  • GLD: 125 USD
  • SLV: 16.50 USD
  • GDX: 21.50 USD
  • GDXJ: 27 USD

Readers should watch those levels closely.

Note how brutal the declines were in the early stages of the bear market, and how close prices of all four assets are moving towards the trendline. That is undoubtedly very bullish.

We continue to believe that we are heading for a very hot summer in the precious metals sector.

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