Sellers continue to dominate in the gold and silver mining sector as evidenced by the inability of these shares to get any sort of updraft from the now daily repetition of new all time highs in the broader US equity markets.
As you can see on the chart below, the HUI simply cannot get anything going to the upside. There are two overhead resistance levels noted on this daily chart. One has proved so formidable that the latter one has not even been in danger of being tested.
The GAP1 region occurred back when we got what amounted to a $200 downdraft in the price of gold itself. This gap formed between 300 and 280. The HUI did manage to run up about halfway into the gap before the selling intensified knocking it right back down again for its impertinence in daring to poke its head up slightly. As long as the HUI cannot clear this first gap, the gold shares are going nowhere to the upside.
I have included a chart of silver today which is in a 4 hour format as it shows the nature of the recent price action quite well. Notice that silver was in a congestion or range trade from the second through the third week in April. Rallies were capped on approaches towards $24 while dips towards $22.50 were bought. The last week of April, silver managed to forge a bit higher of a range with the metal pushing past $24.50 before attracting selling but securing buying on approaches back towards $23.50 - $23.25.
Silver bulls would not want to see this metal breach the bottom of this new range as that would allow bears to take it back down towards the former congestion range bottom once again. On the other hand, if the bulls can take out $24.50 and keep the metal close to that level, they have a good chance of notching the range up a wee bit more with support moving up to $24. Whether that can be done remains to be seen. Much will depend on the attitude of hedge funds and index-related funds towards the "global growth" trade.
Please note that I have provided some commentary to Eric King over at King World News which will be posted later on today sharing my thoughts towards the stock market rally. Be sure to look for those when you get a chance.
"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat
Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput
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