Gold is up, but miners really aren’t (-0.17% in GDXJ) – this could be the “enough is enough” moment.
Just how excessive can a rally get?
Extremely so.
But even the extreme rallies have their limits.
As I wrote previously, it seems that the GDXJ has reached its own ‘this is it’ moment as its rally matched the size of the previously huge upswings. At the same time, it approximately reached long-term resistance levels. Plus, it’s extremely overbought on a short-term basis and it’s still early after U.S. Labor Day – it’s time for a decline.
Gold reversed today and while the session is far from being over, the rising resistance line may have just stopped this rally.
Truth be told, the gold market on its own doesn’t provide a lot of signs at this time, but mining stocks and silver do.
The white precious metal is declining today, and my previous comments on it remain up-to-date.
The USD Index moved slightly higher today, and while it hasn’t invalidated it move below the declining support line yet, it seems that it found support at the lower of the lines – the one based on the daily closes.
The most interesting thing (in addition to miners’ decline despite gold’s move up) today happened outside of the world of charts.
The labor market data just released by the Bureau of Labor Statistics showed that the US economy added 911,000 fewer jobs than previously thought in the 12-month period through March 2025. Economist tracked by Bloomberg had expected the data to show around 680,000 fewer jobs added to the economy in that time frame.
Consequently, some investors may now start to expect a rate cut that’s bigger than 0.25% and if/when the Fed delivers the 0.25% cut, the markets might even view this as hawkish. It was this kind of phenomenon that triggered a sell-off in 2008 when Bernanke cut rates.
Copper and FCX plunged in a spectacular way in 2008. And, well, we might be witnessing the start of another slide right now. I know that it’s a bold prediction (which may or may not be true), but FCX is down by almost 6% today.
Once it confirms the breakdown below the lower of the rising, dashed support lines, the decline below $40 could start and once it gets below the July low, we’re likely to see an even bigger slide. The $24 target for FCX remains up-to-date.
One more thing before wrapping it up for today.
On Friday, I described the way in which the current situation was similar to what we saw in 2008 – we saw the third subsequent nonfarm payroll report that spelt trouble for the economy. Back in 2008, this meant something special for gold.
Namely, a quick rally followed and then a big, 30% decline.
Of course, that was a 30% decline only in gold – the slides in silver, miners, copper, and FCX were not so small – they were extreme.
The above is what I wrote previously. Today, I would like to add that back in 2008, gold rallied for an additional week (approximately) before topping. The third poor nonfarm payroll report was released on Friday. It’s Tuesday today, so it’s not concerning that we haven’t seen this slide yet.
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Letter to Golden Meadow
One last follow-up to the Friday’s note on my past and current performance. As I indicated yesterday, I had received a very supportive letter (entitled “Why I love Golden Meadow”), and since I have the permission from the author – Jeffrey B. Dias – I’d like to publish it below:
To Golden Meadow, Przemysław K. Radomski, CFA, and fellow readers,
My experience with Przemyslaw began when he was standing on the pier in Santa Monica. I watched him toss a scallop shell into the Pacific. He said that was an illustration of what would soon happen to the precious metal mining stocks. I decided then to follow him. Anyone with that level of decisiveness deserved my attention because I could see, based on what he said at the time, that he was basing his view on the combination of vast experience and what I judged to be high-quality, broad analysis.
I'm glad I did. I have doubled my portfolio since then.
In fairness, it should be noted that I have not been a regular subscriber across the entire period. But I did subscribe, and in addition I have read everything (literally EVERYTHING) that Przemyslaw has written in his considerably generous free letters. If I look at that vast array, there certainly have been times when what appear to be specific opportunities have not materialized (yet). This has not worried me. Some frustration, yes. But no worries. Why is that?
I read Golden Meadow letters with two main things in mind: to create a context for my decision making, and to get a fundamentally different view than I might obtain on my own. If a specific idea looks particularly promising, I can choose to pursue it. For example, the best single trade I have made was in FCX. I made good money going in both directions based on Przemyslaw's views.
So now I will explain how I doubled my portfolio. I apply my own experience and the context I glean from Golden Meadow in approximately equal weight. (To understand my half of it, I have been an option trader since the CBOE began trading the first call options in April, 1973. 52 years. I wrote my honors thesis at Stanford on the British Pound, and began trading some currencies before the Euro came into being.) Secondly, I apply quite detailed knowledge mining that enables me to extrapolate from the specifics I find in Golden Meadow analyses. The time horizon of change in economics can be very long. It is always difficult to select the exact turning point. I take that into account.
Here is a look into how I actually apply Przemyslaw's analysis from my perspective, getting down into the weeds. I like to identify and buy mining stocks that have outstanding long-term prospects. Just like Przemyslaw, I like long-term silver, but cannot call the bottom. I require that these have options. I sell both puts and calls. I sell the put to recognize a decline which may occur. If it doesn't decline I make money on the put. If it does decline I may end up owning the stock, but at a price which I have judged reflects (much of) the downside opportunity which Przemyslaw has flagged. I sell the call with a strike price closer to the current stock price than I normally would on my own if I was trying to exploit only long-term upside potential. I reap a better premium on the call, and if stock is called away I don't mind, since my main goal was to make money via down-side protection. This type of focus reflects the downside context that I uniquely get from Przemyslaw. In the interest of completeness, I will divulge one more aspect from my own study: Each mine, and every asset still in-the-ground, is actually a unique "cocktail" (my term) of minerals. The miners and most analysts talk of only the main one within the cocktail: mostly gold, silver, nickel. These assets among the juniors are often profitably extractable only when the price exceeds the marginal cost of the cocktail. So I love it when Golden Meadow thinkers present perspective on a range of metals.
I'm a lateral thinker. Przemysław K. Radomski is, too. But we look at different sets in different ways.... a proven big advantage for me. My investment hero Edson Gould used to say that there are three outstanding buying opportunities in a lifetime. From my point of view, Przemysław in helping me make sure I don't miss my third one.
Jeffrey B. Dias
I’m extremely grateful to Jeffrey for sending this supportive letter, and for proving that there can be multiple ways in which one can get value from my (and other experts’) analyses. And yes, I’ll work on getting more top experts and creating such a community platform that will help all of us take advantage of those outstanding investment opportunities.
…And don’t forget to sign up for Inna’s webinar.
Thank you.
Przemyslaw K. Radomski, CFA
Founder, Editor-in-chief