GDX LT

The GDX model has been "stuck" in a cash position since December 19 and is now clearly between the Oversold and the 0 level. This means that money has been moving OUT of the PM miners sectors for most of the time.

When we look at the TEV patterns of all the gold/silver miners, we can see that 8 miners have their TEV above the average trend line, while 13 are below it and 6 are just on their average. The general picture is slightly negative and the model is mostly dragged down by ABX, which is the heavyweight stock of the sector.

High oil prices do not work in favor seeing lower production costs and since gold prices are not increasing, we should expect negative earnings surprises.

General worldwide central banks easing should be positive for the PM sector and miners, but last month's money flow tells us otherwise.

The GDX model will follow the money and it simply tells us that now is not a good investment opportunity. My opinion is that gold miners will do down because of poor earnings, but that the debt ceiling battle that will start in February could heighten the fear factor and tend to push PM prices higher.



Pascal


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