From the Desk of Ian Culley @IanCulley
I thought March was supposed to be a seasonally weak period for gold.
I guess I was wrong.
Instead of rolling over, gold almost posted double-digit returns last month, while the higher beta plays (silver futures and mining stocks) soared.
As you might expect, many of the bullish trade ideas I laid out last month are working.
And, today, I have two new setups for you to check out…
Before I get to the trades, check out the closing prices on this gold monthly candlestick chart:
I use monthly charts to reconnect with the underlying trend after weeks of following daily price swings.
It’s easily one of my best practices. But it’s not all about the structural trend.
The monthly close carries weight, much like the weekly and daily closes. It marks the end of a time series and an agreement between buyers and sellers.
Notice support came in at its former 2011 monthly closing high at approximately 1,830 – an excellent example of the principle of polarity.
Gold also finished the month within ten dollars of a new all-time high. So close!
Regardless of the timeframe, last month’s price action reveals an underlying strength.
Here are two ways to profit from it:
First, a $1.5B Canadian gold miner. This is Equinox Gold Corp. $EQX:
Equinox is carving out a tradeable low beneath the early 2022 pivot lows at approximately 5.50. If and when it breaks above that level, I like it long toward 9.50 and 13.50 over longer timeframes.
To be clear, I’m not interested in getting long EQX until a daily close above 5.50. I’m also watching for a 14-week RSI reading above 70 to confirm the breakout.
I also like taking a swing at Endeavour Silver Corp. $EXK, despite its $750M market cap:
Many gold and silver mining names have been beaten down over the past decade, so I’m willing to trade smaller companies. I consider it par for the course at this point of the cycle.
More importantly, EXK is breaking to fresh 52-week highs while posting an overbought reading on the 14-day RSI. That’s the type of strength I like buying.
If EXK holds above 3.85, I’m long with an initial objective at approximately 5.75 and a secondary target of 7.75.
That’s the beauty of some of these smaller names – huge upside potential!
But with monster gains come increased risks. Be sure to manage your risk responsibly, remembering the market will always provide another opportunity in the future.
Gold is climbing. High-beta areas such as silver and gold mining stocks are trending higher. And our trade ideas from last month are holding their breakouts.
Sounds like it’s time to put money to work.
Stay tuned!
Thanks for reading! As always, please let us know what you think.
Click here to watch this week’s Gold Rush Video:
And be sure to download this week’s Precious Metals Report below!
Allstarcharts Team
