Dave Erfle, Founder and Editor of The Junior Miner Junky, joins us for a nuanced discussion around the disconnect between the relatively solid gold and silver prices, versus where we’ve seen the precious metal mining stocks being valued for some time. Dave provides his technical outlook on where the support and resistance levels are for both GDX and GDXJ, for investors to keep focused on.
We also discuss that there has been something more going on that last few years, beyond just the narrative that underperformance in all PM stocks is simply due to inflation eating in the margins of producers. There has been continued downside pressure in the PM mining stocks for years now, even when the metals prices were moving sideways to higher, and even this year as inflation metrics have been steadily coming down lower. Inflation and crimped producer margins doesn’t come close to accounting for just how hard the corrections have been in earlier-stage exploration drill plays or why the ounces in the ground are at such low levels for the valuations that developers are getting in the market.
It really comes down to simply low investor sentiment in the PM sector and traders using key news as liquidity events to sell PM stocks across each stage of the spectrum. This has been the case long before inflation started ticking higher, and remains even as inflation has been trending lower all year long. We ask Dave what he sees on the horizon that could change the lack of interest in this sector, and it involves precious metals prices breaking out to new highs to create more momentum, and possibly seeing this paired with a correction in the general stock indexes. Until then, we remain solidly in the summer doldrums, ironically as gold just put in it’s highest monthly close ever to wrap up the month of July.
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