by Jordan Roy-Byrne, CMT
The Daily Gold
Weeks ago precious metals began a correction amid overbought conditions (in the miners) and very bullish sentiment in the metals. The recent Fed minutes helped accelerate the weakness but it lost steam in recent days. A real stinker of a jobs report completely reversed the thought that the Fed would hike rates in the summer and it sent precious metals surging. As a result, the gold stocks and junior gold stocks especially could be back on the path to making new highs before autumn.
Below we show our junior gold index bull analog chart. It is a custom index of 18 stocks with a median market cap of roughly $300 Million. We plot the rebounds from 2001, 2008 and January 2016 on the same scale. From high to low the index had corrected 18%, which compares to the 26% at this point in the 2008-2009 rebound. In 2001 the juniors corrected 29% over five months. Given the reaction to the jobs news, the probabilities say the juniors are more likely to follow the red path (2009) or something close to it then the blue path (2001).