GDX has broken out above $57.50 this morning. I would feel more confident about the breakout if it’s above $58, and that the closing prices stay above $58 for 2 days. But it probably won’t happen until next time.

Regardless, a new high is a new high, confirming the bullish trend in HUI. Based on how the trading tape looks like, I believe the most likely near term resolution would be another shallow pullback after reaching prices above $58. My best guess is for the pullback to come back to $52.50. But HUI is EXTREMELY volatile. In the past, it can easily pullback 30%, which would put $40.60 in range (using $58 peak price).

Markets will frustrate the maximum number of people. If I am the “market” (of HUI), that’s what I will do. Too many people got out, and want to get back in. Likewise, I see many new entrants getting into physical precious metals at the current prices. Therefore I would expect price ascent to slow down dramatically, and/or a brief pullback. In other words, I would expect the mining stocks to out-perform physical for the next (up) phase.

See you at the next top.

Similar Posts:

• Will Silver ETFs Regain Shine in Second Half?
• The “fair price” for gold
• Kohl’s Leads Retail ETFs to New High
• Gold ETFs: Economic Teflon?
• Gold nearing a high