Is The Precious Metals Sector Set-Up For A Big Run?

I had not noticed until I looked mid-day today (Thursday, Aug 24th) and saw that the HUI index was above 200. It ended up closing just above 200. I want to see it hold above 200 dma and move higher from there before I get excited. But the chart has become mildly bullish. GDX, which is a larger representation of the large-cap mining stocks, looks even more bullish that the HUI:

I’m not big advocate of using chart ‘technicals’ to forecast the next move in any market, but many traders, hedge funds and investors use them and they can become ‘self-fulfilling prophecies.’ You can see that GDX (same with HUI and GDXJ) has been trending sideways since early February in a pattern of rrowing volatility. Chartists look at this as a pattern that predicts a big move in either direction. I’ve drawn in a white downtrend line through which the GDX appears to have climbed over. It’s also now above its 50/200 dma’s (yellow and red lines, respectively). I’m not ready to declare a ‘break-out’ yet, but I’m feeling optimistic going into the eastern hemisphere’s biggest seasonal period for accumulating physical gold.

This post was published at Investment Research Dynamics on August 27, 2017.