Gold, silver, and mining stocks all rallied hard yesterday. We saw gold fade in the first quarter and make a double bottom off of long-term support levels in the past six weeks. As this happened, though, mining stocks held firm and then began to rally hard in the last two days. I made a trade in my Ten Position Robinhood Account by selling SNP and replacing it with mining stock KGC. The chart of KGC shows you what is happening overall with mining stocks and why when I look at it I think it can bring me a 35% gain by Labor Day.
See how KGC has resistance at $7.00 now and support at $6.50. If it begins a big uptrend rally I have a target of $9.50 by Labor Day. That’d be a 35% gain.
More important, however, is the indicator on the bottom of this chart, which is the KGC/GLD relative strength index. It compares the price performance of KGC with the price of gold. As gold fell to form a double bottom this week, this ratio simply went sideways to create a positive technical divergence. That’s a bullish sign and it’s happening all across the board with mining stocks.
It is one of the key reasons that I believe the trend is now up for mining stocks. People want confirmation, and most will want to see gold close above $1750 before they get on board, but I bought more now this week as I think it’s going to happen.
I will have a new small cap mining stock pick on Monday!
Yesterday I did a live video trading session about this KGC trade and my Ten Position Robinhood Account.
Oh, and season gold factors are lined up right now, and gold tends to trade opposite to the dollar.
If you want to open a Robinhood Account use this link here and you’ll get a free share of stock.
If you want to learn more about my trading methods grab my book Strategic Stock Trading.
-Mike
