Gold and silver reacted as anticipated, but the unexpected strength in miners surprised me. Miners have a tendency to lead precious metals, so the sudden change got my attention. However, the reversal on Friday may have marked a top. We need to see follow-through to the downside to be sure. Prices closing above the Friday highs would be a buy signal.

It is still unclear if precious metals are dropping into an 8-year cycle low. A sharp decline in silver below $15.68 would provide confirmation. Until then, we have to keep an open mind. It’s important not to become overly confident in any scenario until there is indisputable evidence.

US DOLLAR WEEKLY 

The US Dollar broke out of a 2-year consolidation and targets between 108-112. It would take a weekly close back below the breakout level of 100.60 to alter the bullish outlook.

JAPANESE YEN WEEKLY 

The correlation between the Japanese Yen and gold continues. The weekly chart needs a close above the 87.30 level to neutralize the downtrend.

GOLD WEEKLY 

After seven consecutive weeks lower gold prices finally ended a week higher. A weekly close above $1,170 will form a price swing and signal a potential bottom.

GOLD DAILY 

It’s been 10 trading days since the $1,124.30 low and the rally may have terminated Friday. A daily close below $1,140 could spark another wave of selling.

SILVER 

Daily silver prices formed a bearish engulfing pattern on Friday. If we are dropping into an 8-year cycle low, I would expect to see a sharp selloff if the $15.68 low is taken out.

HUI 

Prices tagged the critical resistance level and immediately reversed. If we are dropping into an 8 year low, I’d expect the capitulation phase to begin from this level. Note: If prices rally and close above today’s high (194.75) then 160.25 will become an important low, and I’ll issue a buy signal for precious metals and miners.

GDX 

Friday may have marked a significant reversal. However, it would be premature to get overly bearish until we see follow-through to the downside and a close below the 10-day EMA ($20.24). Note: There was significant BOW (buying-on-weakness) Friday.

BUYING ON WEAKNESS

A large buying-on-weakness number popped up Friday after the close disputing the Friday price reversal. Data from the WSJ.

GDXJ 

Junior miners also reversed Friday sharply, but there needs to be follow-through to the downside before I consider an interim top. A close above the green trend line would produce a buy signal.

SPY 

Stocks closed below the lower boundary of the consolidation box and prices could correct down to 221.50-220.00 before turning back higher.

WTIC 

Oil produced another tight consolidation day. The 10-day EMA is creeping higher and a close below it next week will mark the beginning of a well-deserved correction.

Markets are closed Monday. I will anxiously be watching miners next week for clues. Significant follow-through to the downside could initiate the capitulation phase to an 8-year cycle low. However, a daily close above the Friday highs will print a fresh buy signal. We are at a significant inflection point.

I wish everyone a healthy and prosperous New Year.