After a tremendous first 6 months, gold, silver and gold & silver mining shares lost their luster. Sentiment dropped death. Wounds are still very deep, a five-year bear market has got investors suspicious over every little drop. But is this necessary? Time for a review after the Trump sell-off.

First and foremost, a correction is pretty normal, especially after the strongest run in more than 3 decades! Actually, pullbacks are a common and necessary evil in a new bull market. Weak hands need to be shaken out.

Three steps forward, two steps back. That’s the way new bull markets are always born.

So, what can we expect about the ‘two steps back’-story?

GOLD

In this context we’ll look at some Fibonacci retracement numbers for gold, silver and the mining sector.

We start the Fibonacci level for gold at the 2015 low till the 2016 high. The low is around $1,050 and the high at $1,375.

• The first Fibonacci retracement level is 38.2% or $1,250.
• The second Fibonacci retracement level is 50% or $1,211.
• The third Fibonacci retracement level is 61.8% or $1,171
• The fourth Fibonacci retracement level is 100% or back to $1,050.

So over the last few months, we saw the first real correction within this new bull market. To be clear, it’s not the end of this bull market. Gold can fall $200 from its high and still be in an uptrend. That’s how powerful this new bull market tends to be.

SILVER

Silver is the same story. The 2015 low ($16.60) till the 2016 high ($21.19).

• The first Fibonacci retracement level is 38.2% or $18.29.
• The second Fibonacci retracement level is 50% or $17.39.
• The third Fibonacci retracement level is 61.8% or $16.50.
• The fourth Fibonacci retracement level is 100% or back to $13.60.

Silver was shaken out to the 50%-level before gold. It tested the retracement level with success. But after Trumps victory, it’s already testing the 61.8%-level. This will prove to be a very strong support for silver.

Investors positioning in silver shouldn’t wait too long. When silver turns, it’s a fast corner and a long shot forward.

HUI

Gold mining shares put their low in January 2016 just below 100. The high in August was just shy of 300 point at 287. This means …

• The first Fibonacci retracement level is 38.2% or 215.
• The second Fibonacci retracement level is 50% or 193.
• The third Fibonacci retracement level is 61.8% or $170.
• The fourth Fibonacci retracement level is 100% or back to 98.

We’re seeing a powerful force deploying in the precious metal market. Fibonacci retracement levels are being tested. Now the HUI is near the 61.8% retracement level.

Once the consolidation pattern is finished, the new leg in the bull market will be as powerful as in the first half of the year. It’s wise to take your seat before the next train leaves the station.