Since early 2018 we have confirmed that our viewpoint on precious metals has changed from bearish to bullish. In October of last year we wrote our Gold Price Forecast For 2018 which showed a bearish environment. However, right after our writing, the gold market changed structurally, and we openly admitted this. Read also 5 Must-See Charts As Gold Is Turning Bullish In 2018 as well as The Gold And Silver Bull Market Of 2018 About To Start. Read more about this in our top gold stocks 2019 update.
Once gold breaks out, and it is a matter of time according to us, weeks or a couple of months, certainly not longer, it will be ‘rock and roll time’ for gold miners. Stated differently, gold miners will provide leverage after gold’s breakout.
Which gold miners to consider buying in 2018? Let’s answers that question which, ultimately, is the only important question for investors. As said many times before,
Once gold breaks out, consider to buy one of these 4 gold miners in 2018
Let’s first review the indexes: the gold mining index GDX (GDX) and the junior gold miners GDXJ.
The GDX shows a huge overhead resistance (annotated on the chart) with a median line that coincides with the blue downtrend line.
The GDXJ has a similar setup: they will need a strong bullish push to break the 7 year downtrend channel to change the bearish trend into a bullish trend.
Since 1980, the stock price of Newmont Mining is trapped in the horizontal channel with a price range between 13.50 – 74 USD. Very recently, price has been in a consolidating trangle. In case it breaks the blue upper triangle line there is a chance for price to challenge the 72 area again within next years. Let’s not forget the bearish case: it could fail to break out and reverse back to 31 or lower.
Wheaton precious metals corporation (NYSE: WPM)
Canadian base silver mining company WPM is making a potential inverted head and shoulders formation which started in April 2013. Note that the inverted right shoulder is NOT completed, yet it seems likely that this is the pattern that is in play. The bullish case: price will complete the formation of its shoulder before challenging the neckline price of ~27.3. Breaking out would send the price to the 46 area again. The bearish case: if price is going to reverse ~18 will be crucial support, and, ultimately, ~10.80.
First Majestic Silver Corporation (NYSE: AG)
Another Canadian base mining company focused on silver production in Mexico and is aggressively pursuing the development of its existing mineral property assets. The bullish case: price found support and broke the median line upwards. For the bullish momentum to build, and take about 1-2 years to challenge the major channel resistance around 14-17. The bearish case: If price somehow reverses and breaks below ~6.3 chances are high that it wants to revisit the previous bottom of around 2.8. Note that his is a very unlikely scenario, but never say never in markets, right.
Goldcorp Inc (NYSE: GG)
This is another Canadian based company that is engaged in gold mining and related activities including exploration, extraction, processing and reclamation. The monthly chart of GG is very interesting. Its price is involved in a tug-o-war between bulls and bears settling between 12-15 at the apex. Something will have to give, and likely in the near term. Again, if gold breaks out, Goldcorp is expected to provide leverage to the upside. Its bullish case: price will break above to challenge 19-20 and further north of 29 and even 56, which is many multiples of today’s price! The bearish case: price would be breaking down and proceed to challenge 9.5, and previous major support sits around 5.3.
Please do your own due diligence before making a decision to invest.