This Chart Signals When Gold Stocks Will Explode


This Chart Signals When Gold Stocks Will Explode
By Jordan Roy-Byrne CMT, MFTA

Gold Stocks remain in a correction, even if the October 29 lows continue to hold into December.

Corrections are a function of price and time, and often in this sector, a correction can continue in terms of time, well after a low in price is made. But I digress.

The most significant and most consistent moves to the upside usually occur after a crash or after a major breakout.

Gold and silver stocks made tremendous moves after the Covid crash and remain in position for tremendous upside moves over the quarters ahead.

As you can see, the junior gold stocks (GDXJ and GOEX) are simply correcting and retesting their recent multi-year breakouts.

GDX already did so but on a smaller scale. It has less upside potential, while SIL (silver stocks) is consolidating before it attempts a major breakout.

In short, when this correction is over, junior gold stocks have a good chance to run higher and higher towards the upside targets (red lines). Silver stocks (SIL) could breakout and run with a minimal retest in between.

The above charts are very bullish, but they do not answer my question of when.

To answer the question, consider the charts of GDX and GDXJ against Gold. These ratios have a great chance to break past the near 8-year resistance.

The GDXJ to Gold ratio, upon a break past its 2013 and 2016 highs, would have a measured upside target of 0.055, which is almost a double in the current ratio.

There will be a one-two punch of Gold breaking past $2,100/oz to new highs coupled with juniors (and all gold-stock indices) dramatically outperforming.

That is when momentum and speculation will explode. GDX will trend towards $100, and GDXJ will trend well past $100.

The good news is that the move of gold stocks breaking out against Gold has not even started.

There's still time, and there's plenty of quality juniors trading at reasonable valuations.

I don't know when that move will start (probably sometime next year), but I do my best to keep subscribers abreast of developments every week.

In our premium service, we continue to focus on identifying and accumulating those stocks with significant upside potential over the next 12 to 24 months. To learn the stocks we own and intend to buy that have 3x to 5x potential, consider learning more about our premium service.

Jordan Roy-Byrne

Jordan Roy-Byrne

Contributing Editor

Email: jordan[at]TheDailyGold.com

Jordan on Google+Google+

Jordan Roy-Byrne, CMT is a Chartered Market Technician and member of the Market Technicians Association. He is the publisher and editor of TheDailyGold Premium, a publication which emphasizes market timing and stock selection for the sophisticated investor, as well as TheDailyGold Global, an add-on service for subscribers which covers global capital markets.

Jordan’s work has been featured in CNBC, Barrons, Financial Times Alphaville, Kitco and Yahoo Finance. He is quoted regularly in Barrons. Jordan has been a speaker at PDAC, Cambridge House and Hard Assets conferences. TheDailyGold.com was recently named one of the top 50 Investment Blogs by DailyReckoning. Jordan earned a degree in General Studies from the University of Washington with a concentration in International Economic Development.

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