How far could the "Robinhooder's" distort the precious metal markets?
So far today the GDX/GDXJ do not seem to be confirming the upward movement in gold prices.
Thank you for this question which may be of interest to the Collective. There is a tendency among precious metals investors to expect a full bull market to unfold in a short period of time. That is because the price tends to range for lengthy periods before experiencing explosive breakouts. These tend to go faster and farther than anyone has been conditioned to expect during the range.
These kinds of moves tend to attract momentum traders of all hues and it is only a matter of time before gold gains a wider following as news of new highs percolates through the media. Nevertheless, gold is now in close proximity to its all-time peak and a short-term overbought condition is evident. Some consolidation of recent gains is a definite possibility.
The most important thing to remember about trading/investing in precious metals and miners is they have a tendency to post sawtooth trends where upward breaks are not sustained. There will be occasions when buying breakouts works, but they are the exception rather than the rule. The explosive move seen over this week has been truly impressive. A clear downward dynamic will be required to check momentum beyond a pause. However, it is worth remembering that this is a characteristically volatile sector, and best bought following inevitable reactions.
The Gold Miners ETF and the Junior Gold Miners ETF paused today, posting small downside key reversals. Downside follow through, sustained for more than a day or two, would be required to signal peaks of more than short-term significance.