Friday Recap (6/14/2024)
AU: $2332 ($2292 - Last Week Spot)
AG: $29.53 (29.13)
HUI: 262 (263)
DXY: 105 (105)
S&P: 5431 (5346)
10-Yr: 4.2% (4.4%)
Oil: $78 ($75)
The news this week was once again all about Wall Street and rising stock prices. We had ATH's in the S&P and NASDAQ, with Apple up big on AI news. An inflation number for May came in this week below the expected target. That pushed the 10-Yr rate down from 4.4% to 4.2%, and it got Wall Street excited about a looming rate cut. Plus, it pushed rate hikes off the table. As I have said, Wall Street has been only looking at a few specific data points, with interest rates trumping everything. As long as rates are dropping, inflation is dropping, GDP is above recession levels, and unemployment doesn't roll over, the risk-on trade rages onward.
Today, gold was up $28 and silver was up 50 cents, and Newmont's volume was still pathetically low (4.5M shares). It traded in a tight range all day (within 50 cents) and closed up 25 cents to $40.50. It traded at $70 in August 2020. Thus, it still needs to retrace 75% just to get back to its cycle high. The miners can't catch a bid because Wall Street remains transfixed on their risk-on trade. When you are making money, you tend to keep doing what is working. No one on Wall Street is ready yet to pivot to risk-off assets, such as gold (where the miners will benefit).
My thesis is that gold made a run (starting in late March) to nearly $2500 because it sniffed out that bad things are coming. However, that run has paused and will remain paused until those bad things arrive. I think gold is trapped in a trading range between $2000 and $2500. Conversely, since gold is trapped, so is silver. My range for silver is $26 to $35. My range for the HUI is 230 to 300. Now we wait for the risk-on trade to finally die. It could be a few weeks or a few months, but don't expect gold, silver, or the miners to roar higher in the near term (above my targets), even if the S&P keeps moving higher.
I plan to buy as many gold/silver mining shares as possible before the HUI reaches 300. Once above 300, and I'll be done. I was going to stop at 275, but I moved it up a bit since the miners remain cheap at these levels. Normally, my buy zone is sub 225, but when it's your last chance, you get what you can. Once above 300, and I expect the HUI to rocket to 400. At that point, there won't be many cheap gold/silver miners. The opportunity to buy miners cheap since the 2013 HUI crash (the last time the HUI was above 400 was in 2013) will be over.
HUI Weekly Chart (Notice 2013)
Charts
