Latest news with #GDXJ
Globe and Mail
05-05-2025
- Business
- Globe and Mail
Gold, Miners, Commodity Investors: Watch Out for Those Reversals!
The U.S. nonfarm payroll statistics were just released. They were better than expected, but overall well within the previous range of values – nothing to write home about. Markets' reaction was relatively small and in perfect tune with the technical patterns that I had already described previously. Gold price corrected a bit after breaking below the previous intraday lows. This consolidation is normal, and it's unlikely to result in any meaningful rebound as no major support level was reached (except for the early April high which was almost reached). Everything that I wrote about gold price forecast for May 2025 remains up-to-date. More importantly, however, the USD Index (to the rally of which gold reacted by sliding) didn't encounter any particular resistance level. In fact, it seems that after the current pullback its price will rally once again. This pullback is completely natural, as the USDX just completed its inverse head-and-shoulders pattern. Corrections after those are common. And since the USDX just bottomed very close to the triangle-vertex-based reversal, it seems that the bottom here is in or about to be in. This, in turn suggests that the corrective upswing in gold and silver is about to be over. The same is likely for the stock market, which is likely also connected to the reversal in the USD Index, but in stocks' case, there's more to that. As I explained yesterday, the stock market has its own triangle-vertex-based reversal point due early next week. Consequently, the current pause after a rally is quite natural. We're still likely to get a (likely big) move lower next week. Besides, the decline in copper already indicated what's likely next for stocks – it moves quite closely with the S&P 500, and it already declined significantly this week. The invalidation of the move above the 61.8% and 50% Fibonacci retracement levels along with copper's strong tendency to form major tops in early May strongly favors big declines in the following weeks. Those, who don't know about this tendency might believe copper's rebound or even FCX's (or other copper stocks' strength) here. But you know that it's all fake. It's a gimmick. A final shakeout of those making emotional purchase decisions. In the previous weeks, I wrote a lot about the links between now and 2008. While the history rhymes instead of being repeated to the letter, but sometimes the market does repeat its performance on important anniversaries. And please note that the final top in copper in 2008 was formed on May 5. If this was to be repeated, we'd be looking for the final top to take place on the next trading session – on Monday. This would be in perfect tune with stock market's triangle-vertex-based reversal and with the fact that the USD Index is likely to rally shortly. Meanwhile, mining stocks provided us with a huge 'things are changing' signal of their own. Namely, the GDXJ just closed below the highest close of 2020! This is a major invalidation and a clear sell signal. Quoting my yesterday's comments: 'This is significant, because the highest daily close of 2020 was $59.58. This means, that GDXJ could invalidate the breakout above this high in terms of daily closing prices as early as today. The lowest weekly close of 2020 was $56.69, so if we were to get this week's close below that, the invalidation would be perfect. And that's exactly what we're likely to get – if not this week, then in the next of the following weeks. Given gold's momentum, and – most importantly – USD Index's likely final bottom, it seems that we won't have to wait long for this invalidation. And the invalidation itself would serve as a gateway to much lower prices in the following weeks. My best bet right now is that we'll get the above-mentioned invalidation in terms of the weekly closing prices next week. The reason is the situation on the stock market.' Thank you for reading the above free analysis. If you'd like to access my complete premium analysis, including specific technical targets for FCX (even options) and silver, detailed analysis of mining stocks, and comprehensive portfolio insights, consider subscribing to my Gold Trading Alerts or – if you want the best – our Diamond Package. If you're not ready to subscribe yet, I invite you to stay updated with our free analyses - sign up for our free gold newsletter now. Thank you.
Globe and Mail
14-04-2025
- Business
- Globe and Mail
Make Big Bets on Gold With These 3 Leveraged Mining Funds
The world's favorite precious metal reasserted its worth as a safe haven asset as markets tumbled in the first few days of April. As of April 4, 2025, the price of gold is up an impressive 30% in the past year and 14.5% year-to-date (YTD). Meanwhile, as the S&P 500 plunged by 8.2% the week of March 31, 2025—due largely to the announcement of sweeping tariffs on imports from dozens of nations—the spot price of gold dropped by only 2.6% at the same time. Increased day-to-day market turbulence and growing calls for a potential recession may prompt investors to exercise caution, and one way to do this is to rebalance portfolios toward defensive plays like gold. And some investors might see an opportunity to make a bolder bet on the precious metal: a leveraged exchange-traded fund (ETF) or note (ETN). These investments can amplify gains but also have the potential to magnify losses for an overall high-risk, high-reward bet. Three such exchange-traded products may appeal to investors seeking to capitalize on gold's rally indirectly —through the share prices of gold mining stocks, which tend to correlate movement with the price of the metal itself: GDXU, GDXU: Broad, Triple-Leveraged Exposure to Gold Miners [content-module:CompanyOverview|NYSEARCA:GDXU] If you're looking for a single leveraged product that offers exposure to both large and mid-cap gold miners, consider the MicroSectors Gold Miners 3X Leveraged ETN (NYSEARCA: GDXU). GDXU is an ETN —a debt instrument issued by Bank of Montreal. This means it doesn't hold physical assets but instead promises to pay returns based on its index. ETNs carry issuer credit risk, so investors are also exposed to the solvency of the issuing bank. This ETN takes a unique approach to gold mining stocks by tracking the performance of the S-Network MicroSectors Gold Miners Index—which is itself composed of two major gold mining ETFs: VanEck Gold Miners ETF (NYSEARCA: GDX): GDX focuses on large-cap miners and has a concentrated portfolio where top holdings can represent over 10% each. VanEck Junior Gold Miners ETF (NYSEARCA: GDXJ): GDXJ targets smaller-cap mining firms but includes a few larger players and some that focus on metals other than gold. Its asset distribution is more balanced, with top holdings closer to 7%. Between these two funds, GDXU provides investors with broad exposure to gold mining companies at multiple places on the market capitalization spectrum. GDXU tends to be more heavily weighted toward GDX, which is made up of larger firms. GDXU provides 3x leverage, reset daily. This means daily gains in GDX and GDXJ are tripled, although investors must be cautious not to remain exposed to GDXU for a longer period, lest they risk diverging from the fund's intended results. This makes GDXU a great choice for investors keen to amplify short-term spikes in the share price of gold mining firms. Its expense ratio of 0.95% is on the low side for 3x leveraged funds, an added bonus. NUGT: A Concentrated, Double-Leveraged Bet on Top Miners [content-module:CompanyOverview|NYSEARCA:NUGT] The Direxion Daily Gold Miners Index Bull 2X Shares (NYSEARCA: NUGT) ETF tracks the NYSE Arca Gold Miners Index, which is the same index that GDX targets. This index is fairly concentrated in a handful of names, with the largest positions routinely occupying at least 10% of the portfolio. This makes NUGT a targeted leverage play on some of the top names in the gold mining space. NUGT is an ETF, meaning it actually holds the underlying assets—in this case, derivatives tied to gold mining stocks. This reduces credit risk and enhances transparency as ETFs don't rely on the solvency of an issuer the way an ETN does. With an expense ratio of 1.13%, NUGT is not an inexpensive fund. Its 2x leverage also resets daily, making it ideal for short-term plays. Indeed, investors wishing for long-term exposure to the index may be better off trading in GDX shares directly—the expense ratio is significantly lower, and results won't be skewed due to compounding returns. Still, for individual days in which the gold mining industry thrives, NUGT is a great choice to maximize gains. JNUG: Aggressive Exposure to Junior Gold Miners [content-module:CompanyOverview|NYSEARCA:JNUG] For traders seeking high volatility and outsized returns from smaller mining companies, look to the Direxion Daily Junior Gold Miners Index Bull 2X Shares (NYSEARCA: JNUG). JNUG offers 2x daily leveraged exposure to the GDXJ, making it a powerful tool for those looking to capitalize on sharp short-term movements in the junior mining space. But keep in mind the risk level is high with this ETF. When you combine small-cap volatility with leverage, it can lead to large swings. That makes JNUG best suited for active traders who can monitor their positions closely rather than long-term buy-and-hold investors. Because GDXJ includes a wider range of companies—some not exclusively focused on gold—JNUG also gives indirect exposure to the broader mining sector. This can occasionally soften or skew its correlation to the price of gold, especially in the short term. With that in mind, JNUG may appeal most to traders who are not only bullish on gold but who also expect junior miners to outperform their larger peers during surges in the precious metals market. Where Should You Invest $1,000 Right Now? Before you make your next trade, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list.
Globe and Mail
26-03-2025
- Business
- Globe and Mail
Silver Analogies, Copper's FAKE Breakout, and Tariffs
Dr. Copper can have meaningful insights into the health of the economy. But what if the Dr. himself is sick? The precious metals market is relatively calm today – just small declines across the board. This doesn't mean that we have no interesting news to report – they are simply not that clear at the first sight. Gold moved slightly lower, and so did the rest of the sector. One interesting thing that's not visible above is happening in the GDXJ, and something quite different (and even more interesting) is happening on the copper market. Let's start with GDXJ. The proxy for junior and mid-tier miners reversed yesterday and this was the seventh trading day after we saw the black candlestick that was heralding an upcoming top. In previous two out of three cases, the top formed on the very next day, and in the remaining case – in February – it formed after seven trading days. I marked both cases with orange rectangles. So far, today's decline is tiny, but it might be the start of something profound. Especially that the volume during yesterday's move higher was very small – which is a sign of exhaustion. The buying power is drying up here. Moving on to the situation in copper – the latter just broke to new highs. Bullish? Absolutely not. And it's not just because the breakout is not confirmed yet. It's not just because of today's reversal. It's also because this is absolutely typical for copper to form its final top in this way – slightly above the first one. That's how copper topped in 2008 and that's how copper topped in 2022. In 2011, there was also a final attempt to move higher, but back then there wasn't enough strength to move to a new high. Either way, copper's final tops aligned with major tops in the precious metals market – in particular ones in mining stocks and silver (and the orange, vertical lines show that). Those were not some short-term indications. No. Multi-month declines followed that created small fortunes for those who were correctly positioned to take advantage of those moves. Why would copper be rallying now? And why is this move likely fake? Tariffs and tariff threats. I already wrote about that on March 5, and we pretty much go more or the same since that time. The announcements and threats were what kept pushing prices higher, but the final effect is likely to be bearish. The Tariff Effect on Copper: History Repeating Itself My March 5th analysis on tariffs and their market implications provides crucial historical context for what we're witnessing now in the copper market. The relationship between tariff announcements and copper prices follows a remarkably consistent pattern: "Remember how when the tariffs were announced, copper rallied very temporarily, and I wrote that it was likely the top at that time (and it was)? We're likely seeing the same kind of effect right now in the case of copper and the opposite in the USD Index." This temporary euphoria in copper markets is currently being replayed as Trump's April 2nd "Liberation Day" approaches. What's particularly significant is how the pattern typically unfolds: "Copper soared once again, and this move is likely fake, exactly for the same reasons it was likely fake previously when the tariffs were announced. Just as copper declined shortly thereafter (and FCX declined much more), the same is likely this time." Historical Examples of Tariff Impact on the USD Index My March 5th analysis documented several historical cases of tariff implementations and their market effects, providing a roadmap for what we can expect now. US-China Trade War (2018-2020) Tariff Actions: March 2018: 25% tariffs on steel imports, 10% on aluminum July 2018: 25% tariffs on $34 billion of Chinese goods August 2018: 25% tariffs on additional $16 billion of Chinese goods September 2018: 10% tariffs on $200 billion of Chinese goods May 2019: Increase from 10% to 25% on the $200 billion of goods USD Impact: Initial strengthening: The Dollar Index (DXY) rose from around 89 in January 2018 to 97 by December 2018 (approximately 9% increase) The USD strengthened against the Chinese yuan from 6.3 CNY/USD to nearly 7.0 CNY/USD The dollar's appreciation was driven partly by a "flight to safety" amid global trade uncertainty Trade tensions also contributed to the Federal Reserve slowing its rate hike cycle, which eventually limited the dollar's rise Steel and Aluminum Tariffs (2018) Tariff Actions: March 2018: 25% tariffs on steel and 10% tariffs on aluminum imports from various countries Initially included allies such as the EU, Canada, and Mexico, though some exemptions were later granted USD Impact: Short-term boost: The dollar strengthened by approximately 2-3% in the month following the announcement The DXY index climbed from around 90 to 92.5 The USD gained particularly against currencies of major steel exporters like Canada, with USD/CAD rising from 1.28 to 1.31 However, as allies announced retaliatory measures, dollar gains slowed Section 301 Tariffs on European Union (Airbus Dispute, 2019) Tariff Actions: October 2019: 10% tariffs on European aircraft and 25% tariffs on various EU products (wine, cheese, agricultural products) worth $7.5 billion annually This was authorized by the WTO in response to illegal subsidies to Airbus USD Impact: Modest strengthening against the euro: EUR/USD moved from about 1.12 to 1.09 over the following weeks Limited overall impact on the broader DXY as markets were more focused on Fed policy The impact was smaller than the China tariffs due to the more targeted nature and lower total value Solar Panel and Washing Machine Tariffs (January 2018) Tariff Actions: January 2018: 30% tariffs on imported solar panels and 20-50% on washing machines USD Impact: Minimal direct impact on USD as these were relatively narrow tariffs These measures served as a prelude to the broader tariff actions that would follow The dollar remained relatively stable in the weeks immediately following these specific tariffs US Tariffs on Chinese EVs and Critical Minerals (2024) Tariff Actions: May 2024: Quadrupling tariffs on Chinese electric vehicles from 25% to 100% Increased tariffs on Chinese semiconductors, batteries, and critical minerals USD Impact: Short-term modest strengthening: The DXY moved up by about 0.5% in the week following the announcement Limited impact as markets had largely anticipated these measures Effect was overshadowed by broader macroeconomic factors, particularly Fed policy expectations Key Patterns in USD Response to US Tariffs Initial Strengthening: Almost all significant US tariff actions have led to short-term USD appreciation, particularly against the currencies of targeted countries. Diminishing Returns: Each successive round of tariffs during the 2018-2020 trade war had a smaller positive impact on the dollar, as markets increasingly priced in trade tensions. Policy Offset: The economic uncertainty created by tariffs often led to more accommodative Fed policy expectations, which eventually counteracted some of the dollar's tariff-driven strength. Differentiated Impact: Higher impact from broad-based tariffs (China trade war) Lower impact from targeted, sector-specific tariffs (solar panels, EU goods) Compounding effect when combined with other dollar-positive factors Correlation with Trade Deficit Changes: When tariffs demonstrably reduced the US trade deficit (temporarily), the dollar strengthened more significantly. So, what the USD Index is actually likely to do here is to become stronger. Does it make sense from the technical point of view? Yes! The invalidation of the move below the 61.8% Fibonacci retracement level is a classic buy signal. This, plus the tariffs' real implications for the USDX creates a very bullish picture for the latter. This, in turn, is likely to have a profoundly bearish effect on the prices of copper, stocks (S&P 500) and – most importantly – precious metals (and miners!). Thank you for reading this analysis. If you'd like to access our complete premium analysis, including specific technical targets (we adjusted a part of our trading positions today), detailed analysis of mining stocks, and comprehensive portfolio insights, consider subscribing to our Gold Trading Alerts. I also invite you to stay updated with our free analyses - sign up for our free gold newsletter now. Thank you. Przemyslaw K. Radomski, CFA Founder, Editor-in-chief
Globe and Mail
19-03-2025
- Business
- Globe and Mail
Gold's Technical Warning Signs Point to 2011-Style Decline
Gold has maintained levels above $3,000 recently, but mounting technical evidence strongly suggests we're following the 2011 pattern rather than the more benign 2017-2018 consolidation some investors hoped for. The monthly RSI indicator reading above 80 represents a severe overbought condition seen only at major market extremes - a stark contrast to the mid-cycle consolidation of 2017-2018 when RSI oscillated around neutral territory. Many investors wonder if there are similarities in price patterns since those were also the early years of Trump's presidency, but the technical structure tells a different story. What's particularly revealing is the percentage similarity between the 2015-2025 rally and the 2008-2011 advance that preceded gold's multi-year bear market. Both rallies demonstrated nearly identical magnitudes, suggesting the current move may be approaching natural exhaustion. Additionally, gold has now reached the upper boundary of its long-term rising trend channel - a strong technical resistance level. Mining Stocks Signal Distribution Phase Yesterday's shooting star reversal in mining stocks represented textbook distribution behavior, with early strength giving way to significant weakness by session's end. This price action typically signals institutional investors using strength to reduce positions. The GDXJ's continued weakness in recent trading further validates this bearish signal. This pattern of mining stock underperformance relative to gold has historically proven one of the most reliable precursors to significant gold market corrections. When miners fail to confirm gold's strength, it often indicates smart money positioning ahead of a trend change in the broader precious metals complex. Interestingly, the same thing is happening in silver. The gold-silver relationship often provides critical clues about market direction. The white metal declined shortly after reaching its 2024 high (there was no breakout) and it's taking place without an analogous daily decline in gold or stocks. Silver is most likely telling us something here. Also, if you're wondering if silver needs to outperform here in order to confirm a top (as that's what often accompanies tops), I'd say that this doesn't have to be the case as we already saw this kind of outperformance recently. What was likely to happen (silver's brief outperformance), already happened. Fed Decision Context: Stagflation Fears Reach Multi-Year Highs Recent markets demonstrated typically cautious pre-Fed behavior, with stocks edging higher and Treasury yields rising modestly ahead of Fed announcements. The Fed is widely expected to maintain rates in the current range while projecting further rate cuts for 2025. However, the context for these decisions has shifted dramatically. Bank of America's latest Global Fund Manager Survey revealed 71% of surveyed investors now expect stagflation - the highest level since November 2023. This psychological shift among institutional investors creates significant vulnerability for asset prices should the Fed strike a less dovish tone than expected. Goldman Sachs projects the Fed will raise its 2025 inflation outlook while simultaneously reducing its growth forecast due to tariff impacts - the textbook definition of stagflationary pressures. This deteriorating growth/inflation mix creates precisely the kind of monetary policy constraint that historically precedes major market declines. During uncertain economic times like these, many investors consider diversifying with precious metals in tax-advantaged accounts such as a Gold IRA or Silver IRA to help protect retirement savings from market volatility and inflation. Gold's Potential Reaction Pattern Gold holding above $3,000 suggests market participants remain hesitant to take decisive action before gaining clarity on the Fed's outlook. However, the combination of extreme technical conditions with clear distribution signals from mining stocks creates vulnerability regardless of the Fed's specific messaging. The interest rate relationship with gold will be critical to watch in the coming weeks as the Fed navigates this challenging economic environment. The parallel to 2011 continues to strengthen with each trading session. In that instance, gold similarly maintained strength temporarily at psychologically important levels ($1,900-2,000) while miners and silver showed early weakness before all three assets eventually synchronized to the downside. Today's continued mining stock weakness while gold maintains the $3,000 level represents nearly identical market behavior. Bitcoin's recent behavior reinforces another important parallel - the cryptocurrency's behavior in 2022 preceding major market stress. During that period, Bitcoin demonstrated similar technical characteristics to today's gold market, with extreme sentiment and deteriorating technical underpinnings despite headline price stability. The take-away is that given a considerable degree of similarity between both periods (technically), we're likely going to see a decline in the precious metals sector when bitcoin resumes its decline. It's now correcting from its rising, medium-term support line, which is quite natural. When this correction is over, the declines in bitcoin and precious metals (and miners) are likely to follow. And given the link to 2022, the upcoming decline is not likely to be small. Speaking of the USD Index, please note that it's forming a broad bottom, just like it did in September last year. The November low appears to have stopped the decline. Despite two attempts to move lower (and additional comments from Trump that "should" make USD decline), the USD Index stands firm. Once the move below the 61.8% Fibonacci retracement is invalidated, we'll know that the bottom is indeed in. This would be likely to translate into declines in gold, silver, miners, bitcoin, and copper. And many other markets. Geopolitical Wild Cards Recent news brought additional geopolitical complexity, with Turkey's political situation destabilizing markets in that region and the potential Ukraine ceasefire following Trump-Putin discussions. These developments could create unexpected volatility across asset classes, particularly if they affect energy markets or broader risk sentiment. Of particular note is oil's decline following news of the 30-day pause in attacks on Ukraine's energy infrastructure. This demonstrates how quickly geopolitical risk premiums can dissipate - a pattern that could similarly affect gold's recent premium. During times of geopolitical uncertainty, many investors turn to gold as a safe haven asset, but it's important to recognize when these risk premiums may be priced out of the market. The current market represents a remarkable technical confluence that demands attention: Gold at the upper boundary of its long-term trend channel Monthly RSI reaching extreme levels only seen at major turning points Mining stocks forming clear distribution patterns (weakness plus clear daily reversal) Nearly identical percentage gains compared to the 2008-2011 bull run Major institutions revising economic forecasts to reflect stagflationary pressures This constellation of technical and fundamental factors suggests we may be approaching not merely a routine correction but potentially a major inflection point for precious metals and broader markets. The price action following upcoming Fed decisions will likely provide critical insights into how these competing forces resolve. For investors with substantial gold and mining positions, this technical evidence warrants careful consideration of risk management strategies. While precious metals often perform well during periods of economic uncertainty, the historical evidence suggests markets rarely move in straight lines. Technical extremes like today's readings have historically provided important warning signals that prudent investors cannot afford to ignore. For those looking to navigate these complex markets, professional gold analysis can provide valuable insights into potential turning points and investment strategies. Thank you for reading my analysis (which is only a fraction of what our Gold Trading Alert subscribers enjoy on a regular basis). If you'd like to stay updated with our other free analyses, I encourage you to sign up for our free gold newsletter today. Thank you. Przemyslaw K. Radomski, CFA Founder, Editor-in-chief
