Miners – Unsurprisingly! – Break Below Their June Lows

The PMs continued their descents on Aug. 15, as higher interest rates and a stock market sell-off helped depress the outlook for risk assets.

Gold declined by 0.46%, silver by 0.23%, the GDX ETF by 2.56%, and the GDXJ ETF by 2.46%. With this kind of decline, we had good reasons to be shorting mining stocks, not the metals.

As a result, the technicals (e.g., the breakdown below the head-and-shoulders pattern in the GDXJ!) and fundamentals continue to unfold as expected, and we believe the PMs will suffer more downside before a tactical buying opportunity arises.

No Fun for the Gold Bugs

Despite calls for gold to hit $2,500 or even $3,000, we warned that the precious metals bear markets would continue until inflation, interest rates, and the U.S. dollar become tailwinds rather than headwinds. And with that fundamental environment still a ways off, it’s no surprise the PMs have suffered, especially silver and mining stocks.

For example, the GDXJ ETF ended the Aug. 15 session at its lowest level since March, and the fall continues to increase the profits from our short position. Similarly, with the iShares 20+ Year Treasury Bond (TLT) ETF closing at a new 2023 low, the movement of interest rates continues to align with our thesis.

Please see below:

Miners – Unsurprisingly! – Break Below Their June Lows - Image 1

To explain, the gold line above tracks the GDXJ ETF, while the black line above tracks the TLT ETF. As you can see, lower TLT prices (higher long-term interest rates) have helped stifle the junior miners, and we expect further downside for the latter before an opportunity to flip long arises. 

For context, we warned months ago that the bond bulls were overplaying their hand and that mining stocks and silver would suffer alongside a reversal. We wrote on Apr. 6:

While sentiment often rules the short term, the medium-term technicals and fundamentals have demonstrated their might time and time again. Consequently, while the USD Index has suffered and the PMs have benefitted, the developments have only loosened financial conditions and made inflation more problematic.

To win the war, long-term interest rates need to rise to suppress borrowing and consumption, and a realization supports higher real yields and a stronger USD Index. So, while the crowd believes QE is only a few months away, another disappointment should confront the pivot bulls in the months ahead.

Hawkish Fuel

U.S. retail sales came in hot on Aug. 15, and once again, supports the notion that higher interest rates are needed to normalize the U.S. economy. As a result, the Fed should remain hawkish, which is bullish for the USD Index

Please see below:

Miners – Unsurprisingly! – Break Below Their June Lows - Image 2

To explain, retail sales’ outperformance highlights how consumption remains resilient, and these figures do not support rate cuts or QE anytime soon. In fact, retail sales are well above trend and indicate that the Fed needs to do more to return the U.S. economy to its pre-pandemic state.

Please see below:

Miners – Unsurprisingly! – Break Below Their June Lows - Image 3

To explain, the black line above tracks U.S. retail sales, while the red line above approximates the 10-year trend. As you can see, the metric hit a new all-time high on Aug. 15 and has not slowed in a manner that supports 2% inflation. Thus, consumers remain in relatively strong shape, and we cautioned that this would occur. We wrote on Jun. 16:

We warned on Mar. 31, 2022, that consumer spending would cause problems for the central bank. We wrote:

U.S. households have nearly $3.89 trillion in their checking accounts. For context, this is 288% more than Q4 2019 (pre-COVID-19). As a result, investors misunderstand the amount of demand that’s driving inflation.

To that point, the Fed updated the metric again on Jun. 8. And with household checkable deposits still highly elevated, Americans have more money now than they did then.

Please see below:

To explain, the figure is north of $4 trillion as of Q1 2023, and only a mild drawdown from the all-time high has been realized. Consequently, there is still too much cash out there to suppress demand enough to normalize inflation. 

So, with our thesis unfolding as expected, little has changed. The Fed has yet to create the demand destruction necessary to eradicate inflation, and the rise in oil prices only worsens the situation. Yes, the recent rise in long-term interest rates should have a major economic impact in the months ahead. But, when the fundamental data weakens, it should create stock market anxiety, which is bullish for the USD Index.

Finally, with the gold bugs in denial about the U.S.’ economic resiliency, their ‘fed is trapped’ thesis has not performed well over the last few years. And with gold still extremely overvalued relative to real interest rates and the USD Index, the medium-term risk-reward is not skewed in the bulls’ favor. 

Please see below:

Miners – Unsurprisingly! – Break Below Their June Lows - Image 5

To explain, the gray dots above represent historical gold prices (since 2003) when the USD Index and the U.S. 10-Year real yield were at different levels. In a nutshell: the downward-sloping black line (linear trend) shows how a stronger USD Index and a higher U.S. 10-Year real yield are associated with a lower gold price. 

Conversely, the blue dot near the top highlights where gold is now. A reading near $2,000 is materially overvalued, considering $1,000 is more common, given the strength of the dollar and real interest rates. 

For context, this chart was created on Jul. 25; and while gold is lower now, the USD Index and the U.S. 10-Year real yield have increased, likely only worsening the relationship. So, while we don’t expect gold to fall to $1,000, the point is that even $1,500 is rich in this environment. 

Overall, the S&P 500 sold off on Aug. 15, as overvalued stocks confront their own issues when interest rates rise. However, the weakness is bearish for the GDXJ ETF, and we expect our short position to generate even more profits in the near term. The same for the upcoming long position.

Silver’s Crash Continues

It was another red candle for silver on Aug. 15, as the white metal declined materially in August. Moreover, with gold suffering a similar descent and the GDXJ ETF closing at a more than four-month low, our short position continues to print profits.  

Furthermore, with the economic data still hot, the fundamental pressures plaguing silver this month should continue over the medium term. For example, the Atlanta Fed increased its Q3 GDPNow forecast to 5% on Aug. 15, increasing investors’ hawkish anxiety.

Please see below:

Miners – Unsurprisingly! – Break Below Their June Lows - Image 6

To explain, the green line above tracks the Atlanta Fed’s estimate, while the blue line above tracks the Blue Chip (investment banks) consensus estimate. If you analyze the performance of the former, you can see that it rose from 4.1% on Aug. 8. As such, it’s another indicator that does not support rate cuts or QE in the near future.

Similarly, the Atlanta Fed updated its Wage Growth Tracker on Aug. 9. And with the metric increasing from 5.6% in June to 5.7% in July, resilient wage inflation should keep the Fed hawkish and suppress the silver price in the months ahead. 

Please see below:

Miners – Unsurprisingly! – Break Below Their June Lows - Image 7

To explain, wage inflation has come down from its 2022 high, but the rise in July highlights how it remains sticky. In other words, returning it to its pre-pandemic state requires more demand destruction; and that means higher-for-longer interest rates, or a recession, both of which are bad for the PMs.

Struggling Stocks

While the S&P 500 suffered a daily sell-off, the index remains overvalued, and the damage was largely immaterial given the 2023 rally. However, with positioning somewhat stretched, a recalibration could sink stocks and put downward pressure on silver and the GDXJ ETF.

Please see below:

Miners – Unsurprisingly! – Break Below Their June Lows - Image 8

To explain, the dark blue and green lines above track the equity exposure of systematic (quants) and discretionary (typically fundamental) fund managers. Analyzing the large drop in 2022 shows that consolidated exposure (the light blue line) declined dramatically as fund managers were underweight stocks.

Yet, the sharp rise on the right side of the chart shows how consolidated exposure went from roughly 1 standard deviation below the average to 0.5 standard deviations above the average. More importantly, systematic funds were in the 71st percentile, and they often buy and sell based on realized volatility. Essentially, they increase/decrease their exposure based on the VIX.

And with an abnormally low VIX poised to rise alongside higher inflation and interest rates, a stock market sell-off could be another catalyst that helps push the PMs lower. 

As further evidence, the chart below highlights CTAs’ (systematics/quants) equity exposure from a long-term perspective.

Miners – Unsurprisingly! – Break Below Their June Lows - Image 9

To explain, the blue line on the right side of the chart shows how CTAs equity exposure remains above their decade-plus median. In fact, it recently peaked at the highest level since before the pandemic. As a result, a fall to the median would result in more S&P 500 selling, while negative levels could coincide with a major correction. 

Overall, the combination of higher interest rates and higher oil prices is bearish for consumption because both reduce Americans’ disposable income. And with those scars poised to show in the months ahead, stock market weakness could help the USD Index and hurt silver and mining stocks. Consequently, we expect our GDXJ ETF short position to produce more profits before we flip long.  

The Bottom Line

Hawkish realities continue to plague risk assets, and we warned for many months that economic destruction would not occur on its own. In reality, you need higher long-term interest rates to suffocate the real economy, and only that reduces consumption and eliminates inflation.

So, with those forces now in play, economic outperformance should turn to underperformance over the medium term. And while this may help reduce nominal interest rates, higher volatility, stock market weakness, higher real yields (lower inflation expectations), and a safe-haven bid for the USD Index should weigh heavily on the PMs.

In conclusion, the PMs declined on Aug. 15, as interest rates again dominated the headlines. And with inflationary history showing that long-term interest rates rise and rise until something bad happens, we still think this cycle ends with a recession.

The above ends today’s analysis, at least the part dedicated to markets. The following is – once again – info about the inaugural RISE session and the direction this is all going. If you have already read it, feel free to skip it – I simply want to ensure everyone has a chance to read it because the effects were so profound. (I will keep quoting this text until the end of this week).


In short, the first Regain Inner Strength Experience session was a tremendous success. Before the key part of the session, I asked the participants about their overall wellbeing on a scale from 1 to 10, and the average was 6.1. I asked the same question after the key part of the session (about 30 minutes later), and it jumped to 8.1.

As far as I know, nobody’s financial status or anything else in their lives changed during those 40 minutes, and yet, due to the internal process that they went through, people were able to substantially increase their wellbeing. People moved from where they were halfway to the max! In 40 minutes! If that’s not how a spectacular success looks like, I don’t know what it would be.

Before the session, I had my own expectations regarding the session; and I considered a move up by one point on that scale to be a success. We got twice as much.

And it actually gets even better!

I asked for more detailed feedback at the end of the session, and it turned out that there was only one person whose wellbeing decreased from 10 to 8, but it came with extra info: “the experience is still growing in me”, which is actually perfect. After some reflection, this person could move “beyond 10” thanks to insights that they will get. If we take the above into account, the real increase in wellbeing would be even greater! One final number – the record increase in wellbeing was from 4 to 9.

One of the questions in the survey was what people appreciated the most about the session, and here are some of the replies (I’m putting in bold the parts that I find key and that I particularly like):

  • That it worked
  • that it helps how to find more certainty and solution to my issues by myself
  • I liked PR’s hands-on approach. No wasting time with anything. This tells me that I need more of these exercises, but rarely someone provides them, let alone for free. I imagine myself doing an exercise in the morning as well.
  •  informative
  • Move forward. The experience is still growing in me
  • Direct and insightful
  • Your presentation is very honest and right from your heart
  • Practical meditation

You can watch the recording over here (in the description of the event), you can watch it also below (but please use the above link if, for whatever reason the embed video function doesn’t work), and you can sign up for the RISE #2 session over here (Aug. 22 – 11 AM EST / 5 PM CET).

Now, while I’m experienced in working 1-on-1 during the Mastering Multidimensional Wealth | 1:1 Coaching Experience, and Reiss Motivational Profile® sessions, facilitating an online session was something new for me, and I didn’t manage to do everything that I had planned even though I added extra 30 minutes to the hourly session.

Next time, I will plan it better, and I will introduce the key exercise in a separate video.

To make watching the recording easier and more pleasant for you, here’s the breakdown:

  • 0:00 – 17:15 – welcoming participants and introducing myself
  • 17:15 – 36:40 – the theory behind the transformation exercise
  • 36:40 – 59:21 – the transformation exercise along with the extra intro
  • 59:21 – 1:20:35 – summarizing the exercise; survey
  • 1:20:35 – 1:28:55 – final quick exercise regarding sharing positive wishes (plus a surprise in the second half of the exercise, which I don’t want to spoil; check it out) and the ending

Using the YT link might be most convenient as it then automatically takes you to the right part of the video (just click “more” on YT to expand the video’s description, and then you’ll see the breakdown of chapters).

If you’re short on time and you trust the process (there’s a lot of science behind it, and as you can see above, I talked about it for quite some time), you can skip the intros and move right to the transformation exercise.


One person in the feedback form wrote (in addition to writing that they found the session to be helpful) that they are wondering what is the ultimate goal of these sessions. In case you’re also wondering, here’s a (long but probably worth reading) reply:

The increase in wellbeing that you saw in the session IS the ultimate goal of these sessions. This assists people in breaking out of the loss-stress cycle regardless of whose analyses they follow because, ultimately, everyone will lose money at some point or hold on to a position in the red for some time before it becomes profitable. And that’s not pleasant. In the loss-stress cycle, the above causes stress (and all sorts of unpleasant emotions: fear, anxiety, shame, guilt, sadness, anger, and frustration are the most common), which in turn makes it more difficult for one to remain objective about the situation, and they take worse investment decisions next time, perhaps making emotional decisions to increase their positions/leverage, or to drop those positions entirely. The irony here is that many tend to drop their positions right before the situation turns around, and they become profitable because it is at the price extremes that emotions are at their highest.

And as people make those less-objective decisions, the chances for more losses increase. Which increases stress, which decreases profits, which causes stress, and so on. Capital, health, and wellbeing in general are all negatively impacted.

What is the default way in which people can try to self-regulate? Some people will engage in sports activities, meditate, engage in their non-market hobbies, etc., but some will want to vent their frustration publicly. While this is understandable, it’s also harmful to others because some of those “others” might have been on the verge of panic, and they wouldn’t have panicked if left alone, but when they see someone else panicking or venting, they will probably be pushed to react in the same way, thus exacerbating the stress-loss cycle.

Now, I’m doing my best with my analytical part, but I can only do so much – I’m human, after all, and neither I nor anyone else can be reasonably expected to pick all the tops and all the bottoms (I did pick the 2020 bottom, though). So, I’ve been thinking if there’s something else that I can do for you in the one-to-many arrangement, where I can assist multiple people at the same time. I’ve been thinking about it for a long time, and I finally realized that if I can make people break out of the stress-loss cycle (whether they are following my analyses or someone else’s analyses), then this will be the ultimate game-changer. The true success always comes within, anyway.

Also, I have a deep conviction that we’re living in times that are so difficult on many fronts, but in particular relating to mental health (and I don’t mean illnesses but being on top of the mental game – happy, relaxed, and fulfilled) that the basics or at least a large part of them should be available either for free or at a price that’s affordable for everyone. With 1-on-1 services, it’s different, because it fully engages the provider and makes them unavailable to do anything else.

I’ve been collecting insights from various sources (believe me, what’s in RISE is the tip of the tip of the iceberg of what I learned and tested in the previous years), and in cooperation with the Stanford School of Medicine (and others), I came up with the idea to provide the Regain Inner Strength Experience sessions for free, and also to provide a course with key insights and exercises for next to nothing (probably $5 per month). This course, entitled “From Fear to Fortune” is currently in the making. This way, everyone will be able to enjoy their lives more, make more money on their trades, and make Golden Meadow a better, more supportive platform – everybody wins.

All this will also serve as an intro to many other courses (and then newsletters), some with basics of finance and investing, some aimed at more advanced areas in finance and wellbeing (you’d be surprised how much can be done with just breath – and yet very few people discuss that). We’ll greatly expand investment and financial scope of what’s available but also on the front where those “other” important things are – like communication, relationships, memory, preventing neurodegenerative diseases, increasing life quality in general, and many more.

Like I said, I experienced quite a lot (I’m working in the markets, I’m a CEO, and I dedicate less than 1h total per week to workouts, and yet when doctors look at my bloodwork, they ask if I’m a professional athlete – how? Research and efficiency in what I’m doing – it’s all connected), and it’s really surprising to me how underutilized the synergy between finance, wellbeing, and self-development has been up to this point.

So, the long answer to the question is that this is leading to increased wellbeing of everyone, who participates, increased profitability (of course, no guarantees, but you know very well how one thing leads to the other), and building a platform that will allow for enormous scaling of this effect. To make the world a better place and become happier and wealthier while doing so.

Also, while I’m at it, I’d like to mention two things:

  1. I re-introduced my 1-on-1 service, because it was previously described in a manner that didn’t really emphasize what it is that I can do. The new and up-to-date name of the service is Mastering Multidimensional Wealth | 1:1 Coaching Experience . I have only 4 seats available because I assume that this will be an ongoing weekly experience for those who enter into this engagement. That’s where the biggest benefits can be reaped. However, it might be best to start with 30 minutes at first to just get to know me in this sort of work (it’s priced at a fraction of the regular session’s value), and we’ll both see if we’re a good match. If so, I’ll likely have some ideas for you even during those 30 minutes, and you’ll see if my approach makes sense for you and whether you want to go into a longer engagement – where a true transformation can (and likely would) happen. If you feel that this is something that could be helpful to you at this stage of your life, you can book your seat here.
  2. The above has only 4 seats available even though there are 5 workdays in a week (I plan to have one of those sessions per day), because the fifth session will be reserved for someone who will have a priority due to the specific nature of the cooperation. Namely, I would like to enter into a partnership with someone (just one person) – a visionary investor who seeks to leave a profound mark on the world, and I plan to use all my insights to make sure that this person’s wellbeing will increase as much as possible thanks to our cooperation.

I can and will do all the above work related to Golden Meadow, anyway, but a partnership would speed things up substantially. I described what my plan and motivation are, and if you share my passion and are moved by the work that I’m undertaking, please consider this a call to action.

I’d like to welcome a strategic investment of $1M from a single individual who is not only driven by financial potential but also by the profound impact that can be achieved. It isn't just an investment in numbers but an investment in a vision that encompasses collective well-being. By partnering with me, you'd not only be enriching your financial journey but also contributing to the betterment of the world.

If you resonate with the deep resonance of this vision and want to explore the extraordinary potential that this investment partnership offers, please reach out today. Also, I’ll be in California in about a month, and I’ll be happy to meet to discuss the vision for the company with this person. This is your chance to ignite transformation not only within your wealth portfolio but on a global scale. Let’s start a conversation that has the power to shape not just your future but the world's.

Thank you for reading our free analysis today. Please note that the above is just a small fraction of the full analyses that our subscribers enjoy on a regular basis. They include multiple premium details such as the interim targets for gold and mining stocks that could be reached in the next few weeks. Subscribers also get intraday follow-ups whenever the situation requires them. We invite you to subscribe now and read today’s issue right away.

Przemyslaw K. Radomski, CFA
Founder, Editor-in-chief