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Gold & Silver Mining Sector Outlook (video)

This video takes a comprehensive look at the gold & silver mining sector, including numerous trade setups on individual mining stocks. An example is also provided supporting my preference to short vs. going long the 3x mining etfs, NUGT & DUST, when swing trading the miners with either a net long or net short position. Please log in or sign up for your free 3-week trial to view.

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Aug 18, 2016 1:29pm|Categories: Gold & Commodities|Tags: , , , , |17 Comments

17 Comments

  1. GetItRiight August 18, 2016 2:12 pm at 2:12 pm

    As I don’t have a margin account, my preference is either to go long a stock or ETF or go long an inverse ETF, like DUST. I prefer ETFs though, probably less risky.

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  2. Art August 18, 2016 2:28 pm at 2:28 pm

    Great video–Yes I would like to see the individual company shorts.

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  3. jameske August 18, 2016 2:42 pm at 2:42 pm

    Randy, I would like to see the individual stocks and the etfs. I can short small amounts using CFDs for most of the gold and silver mining stocks. So, this might be a good time to try it out. But I do not enter unofficial trades, so, for me, when any trade becomes official I will have a look at it and decide then.

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  4. GetItRiight August 18, 2016 2:47 pm at 2:47 pm

    By the way, is there a leveraged ETF, preferably inverse, for SIL?

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    • rsotc August 18, 2016 3:59 pm at 3:59 pm

      GIR- I’m not aware of any inverse ETFs for the silver miners but if anyone knows of one, please chime in. I’d like to add it to the ETF Center on RSOTC (located under Resources on the menu bar at the top of the site).

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  5. Hanuman August 18, 2016 3:02 pm at 3:02 pm

    Thanks for the update! You asked for comments and requests:
    1. Follow GDX, GDXJ and SIL
    2. Follow individual stocks based on your best R/R analysis
    3. Follow GLD holdings, not price, as ‘outflow’ is an excellent DIP indicator
    4. This is a very fertile arena that’s worth following closely

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    • rsotc August 18, 2016 3:46 pm at 3:46 pm

      Thanks for that feedback, Hanuman. I do occasionally look at & trade GDXJ but for the most part, it will follow GDX. However, since the junior miners are typically higher-risk (fundamentally) companies with smaller market caps that the senior miners (GDX), I liken trading GDXJ to trading IWM over SPY; generally (of course with a few rare & relatively brief exceptions) they move in the same direction, only GDXJ has a higher beta compared to GDX just as IWM has a higher beta compared to SPY, meaning they tend to rise more when GDX/SPY is rising & fall more when GDX/SPY goes down.

      In other words, if you get the directional call on a trend for GDX right, you will most likely be able to go long or short GDXJ and outperform the move in GDX. Case in point: Off the Jan 19, 2016 lows to last Friday’s high, GDX has rallied 156% with GDXJ clinbing 207% over the same time period.

      Time permitting, I would cover both & at times I will but for the most part, I find it more manageable to focus on GDX and at times, like right now, I’m putting a bit more emphasis on SIL since it appears to offer more downside potential on the next correction than either GDX or GDXJ.

      By following GLD holdings, I assume that you mean the inflows & outflows into that etf. Great idea, do you know of a good source to get that information, preferably with minimal lag time on the reporting? Again, thanks for your feedback & suggestions.

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  6. rsotc August 18, 2016 3:26 pm at 3:26 pm

    @GetItRiight @Art @jameske & anyone else that adds their preference on trading individual stocks vs. ETFs to after this, thanks for your feedback. I will look to add both individual mining stocks as well as the mining ETFs (GDX, SIL, NUGT, DUST, etc..)

    I also wanted to share the fact that while normally I would go ahead & add several of those mining stocks that stood out to me in the video as trade setups today, the reason that I’m holding off for the time being is due to the following: A trade setup will have typically one of two entry criteria; a break above or below a trendline (which entails a dynamic entry price, as trendline values are continually changing as time goes on) or a move above/below a set price, typically a move above/below resistance/support.

    My hesitation to adding any individual trade setups on any of the miners right now is similar to my hesitation to adding any broad market shorts right now; the current uptrend, although clearly waning in momentum lately, has been unusually resilient, with any breakdown of one index (or mining stock, GDX, etc.. in the case of the miners) seeing little to no follow-through as the related index (or gold, silver, SIL, etc..) doesn’t confirm the breakdown as it might normally, instead either continuing to move slightly higher or sideways for days & even weeks recently. (The recent failed IWM short trade is a good example of that).

    As such, if I were to add, say PAAS as an official short setup with an entry to be triggered on a break below that beautiful & extremely steep bearish rising wedge that I highlighted in the video, it could very well trigger an entry while the bulk of the remaining silver stocks and/or SIL (as well as the metal, SLV) continue to hold above support, thereby considerably increasing the odds of a false breakdown or maybe a backtest of the wedge at higher levels before finally rolling over for good (keeping in mind that the steeper the slope of a wedge or uptrend line, the higher the level required for a backtest).

    With that being said, I can see the possibility of some catalyst that sudden causes a big drop in the mining sector & underlying metals, in which case those setups will all trigger in very short order, making it very hard for me to mock up the charts, upload them to the site, compose the post & do all the other behind the scene thing that I do when publishing a front page post (assign symbol tags, categories, etc…). I would say that it takes about a minimum of 10 minutes from start to finish to publish a post, often longer, especially if I have to update the annotations, price targets,etc.. on the chart at that time. I’ve traded the miners for years & fewer sectors can rise or drop so quickly, once the momentum traders jump in or out. I strive to post objective entries so if PAAS were to have already dropped 15% or more below the wedge by the time I was finally finished composing the notes & charts for the post, then I probably wouldn’t pass it along as a trade idea. You guys have no idea how many explosive breakouts that I but get price alerts and either trade, pass on or just miss because I’m busy with something else on the site at the time, but never mention since I couldn’t post the setup in time for an objective entry. With a few exceptions, such as when there is a chance to enter the run-away breakout on a pullback, I don’t even mention it as that would annoy me if someone pointed out some great trading opportunity after-the-fact.

    I share this because IF we happen to get a catalyst that triggers a big move down in the metals (or the stock market for that matter), then I might just publish a very brief summary of which positions are currently offering objective trade entries while following up with all the details at my earliest convenience. By covering some of those trade ideas that currently stand out to me in today’s video, at least that gives everyone a heads-up of what I’m seeing as far as the chart patterns, where the trendlines or horizontal support/resistance levels are and where my some of my potential targets might be. Otherwise, you’d have to decide to take a trade on blind faith without with the exact price target(s) & suggested stop level(s) or having any idea what the reasoning behind the entry is.

    This may or may not happen but over the years I’ve seen plenty of times where I was patiently keeping my trades very light for an extended period of time & all of a sudden my PC is buzzing with price alerts going off one after another. That may not happen soon but I have a watchlist with price alerts set on numerous setups that has been swelling lately so it very well could. My point is that if you like a setup, consider replication the pattern & key level and targets (or add your own) on your own chart so you are ready & confident to pull the trigger on short notice, if need be.

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  7. Art August 18, 2016 3:39 pm at 3:39 pm

    Thanks Randy, that is a very thoughtful attitude. I know exactly what you mean as i have had friends try to follow me daytrading and it just usually doesn’t work out because of the speed of the trades and the timing involved. I for one would be perfectly happy just seeing a post saying -Short PAAS now, ill explain later.– I think most members could look a chart for themselves and decide to take the trade or pass on it without the full chart analysis. At least i would hope so but if not they could just wait for the trades that are more swing type with the setups explained.
    Thanks so much for all the info

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  8. jameske August 18, 2016 4:01 pm at 4:01 pm

    Randy, I agree with Art there. No need to have a major post to clue people in to an official trade. All that is required is to clue us in quickly. I would say the official trade major post could be done at the end of the day with charts etc if you feel it is necessary, All I think is necessary is the official trade status, the entry point, targets and the stop.

    If you could hide your tweets to members only, or set up one for trades only, then perhaps that is a way to make it instantaneous but without all the messing around with a big write up. For example, E for Entry, Lo or Sh for Long or Short, T(x) for target(s), and ST for stop, so the trade would look something like, PAAS Sh E=20.86, T1=19.20 T2=18.00. ST=21.46. Fits into a tweet and provides the info.

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  9. Eric K August 18, 2016 6:15 pm at 6:15 pm

    Randy, that sounds like a good plan. I for one like the individual stocks right now. When I look back on the year it’s the individual positions that I’ve done best on, with the exception of trading the 3x ETFs with broad market moves.

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  10. joefriday August 18, 2016 10:37 pm at 10:37 pm

    Thanks Randy…good overview… I personally have no preference for posting ideas for trading either ETF’s or individual miners..I trade them both.. I suppose providing more of variety of trade ideas can’t hurt ……but of course that means more work for you… lol

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  11. dmel August 19, 2016 6:00 am at 6:00 am

    randy, if you just post good set ups that would be fine. let people make up there own minds to take the trade or not

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  12. rsotc August 19, 2016 9:27 am at 9:27 am

    Thanks to all that provided feedback on their preference, or lack thereof, for trade ideas individual stocks vs. ETFs. It also hit me after that post that I can start to post some of the setups in advance showing the chart pattern, notes on the setup & possibly some price targets while leaving the entry criteria TBD. As such, if it suddenly appears to be an objective time to engage that particular sector, in this case the mining stocks, I can quickly fire off a post (which will immediately send out an email notification to those subscribed to receive them). Members can then go to the site & click on the symbol/ticker tag to quickly reference any previous notes & charts on that trade idea.

    Symbol tags can be referenced in several ways:
    – At the very bottom of each post, any ticker symbols mentioned in that post will contain the symbol tag, e.g.- “GDX”. All tags are hyperlinked to pull up all posts that have been assigned that tag in order of most recent.
    – One can also use the “Select Tag” drop-down menu located near the top of the sidebar on the right-hand side of the home page. Tip- As there are a large number of symbol tags, once you click the drop-down menu to expand, you can type the ticker that you would like to reference to jump down to it, then press enter after you see it highlighted. Don’t type too slow or the highlighted box will only jump to the first letter that you are typing.
    – If you go to any of the Trade Idea categories under the menu bar at the top of the site (e.g.- Active Trades- Long) and click on any of the symbol tags located at the top of the page, that will load only the posts for that ticker symbol associated with that particular category. e.g,- all posts related to the current trade on XYZ instead of all posts every published on XYZ (as the previous two methods above will do).

    I also had a suggestion to send out time-sensitive trade ideas via a members-only twitter feed. I am open to that possibility, especially if there is enough interest. However, I’m just not sure how many members currently use or care to use twitter so if there is enough feedback, I will certainly look into the feasibility of doing so.

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  13. riverbirch August 19, 2016 10:54 am at 10:54 am

    Thanks for the video.
    Randy when viewing the daily GLD and SPX charts since Jan. 2016 they are in lockstep . Is it probable that both of these indexes will correct in lockstep over the next few months? The same can be said for most of the stock indexes QQQ, IWM, etc.
    I DON’T KNOW WHAT IMPPACT OIL AND ENERGY WILL HAVE ON SPX.

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    • rsotc August 19, 2016 11:32 am at 11:32 am

      riverbirch- Although that correlation between GLD & SPX has been fairly positively correlated so far in 2016, they could very well continue that correlation for a while or it could end any day now. If you plot GLD or $GOLD over SPY/$SPX going back 10-year or more, you will see a relationship that have shifted from highly correlated to a clear negative correlation that can last for many months even years. Gold & SPX seem to march to their own drum beat. Bottom-line: I think it’s best to formulate your outlook for each depending on their own unique technicals & fundamentals.

      Oil has a better historical positive correlation with the stock market although that correlation made a stark divergence starting back around mid 2014. The problem with trying to align or position your trades or longer-term investments based on historical correlations now is the fact the in the history of financial markets, we have never seen anything close to the unprecedented manipulation of the free markets by the global central banks as have seen in recent years. The result has been very odd distortions between asset classes as well as the typical sector rotation that normally occurs throughout the business cycle (e.g.- a rotation out of growth companies & into defensive stocks as an economic expansion begins to mature. e.g-This time around, income investors have been bidding up those stocks for years now to replace the lost income from bonds, CDs & other safe-haven, normally high-yielding investments, creating excessive valuations which is likely to prove to be a major problem when the next economic contraction clearly sets in, as those defensive stocks are already overvalued).

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