Yesterday, the stock market fell a bit, but I don’t think that is a big worry. What is a little odd to me is how Treasury bond yields fell again. It is like they are saying that the economic growth boom is actually peaking. That doesn’t mean a recession is coming, but the bond market sure isn’t predicting a continued increase in the rate of GDP growth it looks like to me.
This could be why gold and mining stocks are now stabilizing. The GDX gold stock ETF, for instance, is now trading in a very narrow 2 point range this month, as you can see from this chart.
Notice how the 20-day Bollinger Bands for GDX are getting tight.
Oops, the indicator on the bottom of this chart is a GDX:GDX ratio. Well it is completely flat, because when you divide the price of GDX by GDX you get one. With another mining stock though, the situation changes, and this ratio becomes a way to compare the performance of the stock with the GDX ETF.
I did that with the chart for small cap gold stock Sonoro Gold and take a look. The ratio has been going up, to show us that SGO / SMOFF shares are now outperforming their sector.
SGO seems to be settling in a nice consolidation buy range right above new support at 30 cents. I made it my top stock pick for the month and you can find more from my original post about it here. The folks at Equity Research also put a 3X triple play price target on the stock from here too.
Dave Skarica of addictedtoprofits.net interviewed the CEO of Sonoro a few days ago.
Bottom line – the June drop shook up a lot of people invested in gold stocks, even making some sell. However, SGO barely dropped at all, which is a sign of pure relative strength against the overall sector and a bullish sign for its future.
Disclosure: Mike Swanson owns shares of Sonoro Gold. Because it is a small cap stock with a market cap of less than $100 million USD he has put himself in a trading blackout on Sonoro Gold and will not buy or sell a share of its stock for at least 30-days from the date of this post (07/06/2021). Wallstreetwindow.com, is owned by Timingwallstreet, Inc., which is being compensated by a third party (Leadgopher LLC DBA Pinnacle Ad Network) to conduct an investor awareness advertising and marketing campaign for Sonoro Gold. This third party paid Timingwallstreet Inc., $12,000 USD to produce and disseminate this and other similar articles and send traffic to them through paid advertising campaigns for 30-days from the date of this post (7/06/2021). This compensation should be viewed as a major conflict with our ability to be unbiased, more specifically: This communication is for entertainment purposes only. Never invest purely based on our communication. For more on trading risks read our policy statement by clicking here.
