Building off last night’s GDX update, I wanted to point out additional similarities between 2016 and now.
GDX 2016 CORRECTION: After a very sharp rise in 2016, miners entered a multi-month corrective phase. The 2020 pattern is following a similar path and could confirm a bottom soon.
Note: The third and final breakdown (below the November 2016 low) lasted about 2-weeks; prices bottomed 4-days after the initial breakdown and closed back above the November on day 10.
GDX 2020 CORRECTION: After a sharp post-Covid rally in 2020, gold miners entered a prolonged 2016 style correction. The pattern stretched a bit longer, but we’ve completed the three drops and broke the November low. I believe prices bottomed and are about to establish a new uptrend.
Today marks the tenth trading day since the breakdown below the November 2020 low. A decisive close back above $33.00 would support a repeat of the 2016 bottom and recommend a new advance in precious metals.
Lastly, I wanted to remind everyone of the big picture concerning precious metals. If commodities are starting a decade-long bull market, as I suspect, then the retest of the $30.00 breakout in GDX could turn out to be a fantastic long-term entry, in my opinion.
To summarize, several factors favor a bottom in precious metals. A strong and decisive move in GDX back above the November $33.00 low today or tomorrow would promote this outlook.