Warning signs in precious metals
By Jordan Roy-Byrne, CMT, MFTA
Precious metals closed the first quarter with solid gains. Gold gained almost 9% while Silver gained 14%. The miners (GDX and GDXJ) gained the same amounts (9% and 14%) but unlike the metals which closed at their highs of the quarter, ended up losing more than half their gains. Despite a strong quarter, the entire complex remains below the February highs and 200-day moving average (ex Silver) just days after the US Dollar index rebounded strongly from its own 200-day moving average. As the second quarter begins, the warning signs for precious metals are mounting.
It is never a good sign when Gold is the strongest part of the sector and especially while the sector trades below key moving averages. While Silver rests above its 200-day moving average and has recently outperformed Gold on a percentage basis, unlike Gold it has yet to reach its late February highs around $18.50. So in that respect Silver has lagged Gold. Meanwhile, the miners have not even come close to returning to their 200-day moving averages or February highs. They first reached their 200-day moving averages ahead of the metals and also began their correction first.