As annotated on the charts posted below, GDX is nearing potentially important resistance in the 23 area. Although in my last post they managed to fake me out of most of the miners, it turned out be a capitulation move. When there was no follow-through to the downside, I bought back into a relatively small position in NUGT which has now more than tripled. Fortunately, I also held on to a position in HMY which has gone up about seven fold. I'll be looking to close out mining shares and potentially go short GDX at 23 with a tight stop. I'm raising stops on NUGT and HMY now in case the rally in miners fails and GDX doesn't reach 23.
The move up in silver mining shares (along with the gold miners), while silver goes essentially sideways, typically portends a catch-up phase for silver to come. I don't know if it will happen this time, but I think there is better than a 50% chance of a violent vertical move up before we peak and potentially trend lower into the forth quarter of 2016. The ideal timing for a top in silver and gold is sometime from mid to late April 2016, assuming the rally has not ended as of last week. I'm still holding long futures in the metals as well as long-term call options on SLV. However, I"m watching closely for signs of a failure here at the trendline resistance shown below, and have stops entered on the futures longs. It's not really practical to use stops on options, so those are a little tougher to protect profits.
Kim Rice 3/20/16
