Dave Erfle, Founder of the Junior Miner Junky, joins us to provide his technical and macro outlook on the short-covering rally that we’ve seen in the markets the last few weeks, and what support and resistance levels he is watching to see clear in gold, and the mining stocks in GDX and GDXJ. The move higher in the markets and commodities was further underpinned by the US dollar rolling over from its highs over 109 and with interest rates pulling back down some, so we discuss what would cause a more prolonged move higher or lower in the greenback.
There is still some trepidation and selling in the mining stocks though, and lower volumes, so there doesn’t seem to be much energy to this latest move higher. Dave again highlighted the inflationary forces that hit the largest gold producer and bellwether stock, Newmont Mining, after a very rough quarterly operations report. He also pointed out how it is a big component in the ETFs, so it will be important to see it turn higher for generalist money flows to come back into the sector. We wrap up discussing the dichotomy between the overall valuations in the mid-tier and large-cap producers and royalties companies, versus the extremely low valuations seen in the junior mining stocks; which is where Dave feels the edge is currently for investors that are accumulating them.
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