The Gold Price Increased – And So Did Our Profits

Gold price continues to increase, and so do our profits. It seems that switched from short to long positions exactly on the day of the reversal.

Given yesterday’s upswing and today’s pre-market move higher in gold and silver, it seems that the GDXJ will move higher once again today. And even if it doesn’t, it’s still likely to rally soon, anyway.

Let’s take a look at the charts, starting with gold.

The yellow metal moved higher by over $10 yesterday, but given the position of the stochastic indicator, it seems that the rally has only begun. The RSI moved higher after touching 30, but it’s not close to the 50 level just yet, which means that it has room to rally further.

After all, the previous – very similar – corrective upswing (that we saw in mid-2022) ended with a gold-based RSI close to 50.

What about silver?

So far, the white metal has moved insignificantly, which is... normal. Silver tends to outperform close to the end of a given upswing, and the current corrective upswing has only begun. When silver does catch up, it will serve as a “time to reverse positions” signal.

Don’t get me wrong, silver is not boring at this time. Conversely, it just invalidated a small breakdown below its mid-November 2022 low, which is a bullish development for the short term.

On Monday, I commented on the USD Index chart in the following way:

It has recently moved slightly above the 105 level and close to its previous 2023 highs. That high – in terms of the daily closing prices – was 104.83. The intraday 2023 high was 105.50, and the USD Index just moved between those levels. So, overall, one could that say the previous 2023 high was approximately (!) reached.

This level serves as resistance, and it seems that it would be a good time for the USDX to pull back and prepare for another powerful move up. The RSI close to 70 clearly supports such an outcome as well.

On a final note, a pullback here would create the handle of a bullish cup-and-handle formation in the USD Index that would be a perfect launchpad for a medium-term upswing in the U.S. currency – and a powerful downswing in the precious metals sector.

Indeed, the USD Index moved back below 105 shortly thereafter, but the pullback has been rather insignificant so far and smaller than pullbacks tend to be.

Consequently, it seems that the USDX has further to decline and the precious metals sector has some more rallying to do.

The junior miners rallied (thus increasing our profits), and they did so on strong volume – one of the strongest volume readings that we saw so far this year.

In fact, the only other similar case when GDXJ moved higher on volume that was as big as what we saw yesterday was at the very beginning of the year.

What happened then? The GDXJ had continued to rally for several days, but then the rally stalled and the GDXJ formed the yearly top.

So, the implications appear to be bullish for the following several days, but not so much for the following weeks and months.

That is, after all, in line with what has been predicted based on a variety of other indicators.

Consequently, the nice profit potential for the current trade is still there, and the enormous profit potential of the next trade (taking profits from the current trade will probably be immediately followed by an inverse trade) also remains in place.

Thank you for reading the above free analysis. The premium analysis I just posted, on which the above is based, continues and additionally includes a special GDXJ ETF, on which I’m providing a detailed overview of the upside price target. I’m also discussing the strategy for this trade, and I’m featuring detailed price targets not just for the GDXJ but also for the JNUG (2x leveraged proxy for junior miners), silver, SLV, AGQ (2x leveraged proxy for silver), gold, HGU.TO (Canadian 2x leveraged proxy for gold stocks), and HZU.TO (Canadian 2x leveraged proxy for silver).

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

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