First, gold failed to hold its breakout to new all-time highs.
Then, the silver-to-gold ratio undercut a critical shelf of former lows.
Now, the Gold Miners ETF $GDX is printing a new all-time low versus the broader market!
Is there any sane reason to bet on the miners right now?
Let’s take a look…
Check out GDX relative to the S&P 500 ETF $SPY:
If precious metals are in a bull market, the stocks that benefit the most in that environment are not making new all-time relative lows versus the broader market.
And if the new all-time relative low isn’t enough, the components of the Philadelphia Gold & Silver Index cover it:
Only one – Eldorado Gold $EGO – out of the 30 stocks in the index did not print a fresh four-week low last week.
Ugly!
Yet plenty of gold mining stocks continue to carve out bullish reversal formations despite the broad near-term weakness.
Orla Mining $ORLA stands out:
ORLA is forming a potential inverted head and shoulder pattern as the 14-day RSI posts a bullish divergence.
It’s constructive. But it doesn’t mean we can run out and buy ORLA – at least not yet.
A decisive close above 3.50 flashes a buy signal with an initial target at approximately 5.
But I highly doubt a buy signal triggers under the current selling pressure. Nevertheless, I have ORLA on my radar.
Bearish data points are mounting for precious metals. It’s time to clamp down on risk, exercise patience, and track the strongest mining stocks.
