Jordan Roy-Byrne, Founder and Editor of The Daily Gold, shares his technical outlook for gold, and doesn’t expect to see better valuations in the precious metal mining stocks until the yellow metal breaks above $2100. We start off reviewing how gold is performing in relation to general US equities, and how GDX and GDXJ have performed versus the gold price. Both of these metrics are not encouraging new buyers to come into the sector at present, and sentiment remains poor as prices have continued to correct over the last month.
We go on to discuss one reason for some underperformance in producers is how inflation has compressed their margins over the last few years. However, inflation crimping producers margins doesn’t really explain the even worse underperformance of the junior explorers and developers, where even good news is being sold off as a liquidity event. It really comes down to poor sentiment in the sector that will only improve when gold breaks out to a new high, which is where Jordan believes we will begin a new bull market in real terms.
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