Gold failed to break above $2,000, yet another time, and right now, it appears to be forming the right shoulder of a broad – yearly – head-and-shoulders pattern (the January top would be the left shoulder).
Of course, the pattern is just “potential” right now, but completing it seems likely, and the downside target based on it would be at about $1,600 (the size of the decline after the breakdown is likely to be similar to the size of the “head” of the pattern).
Naturally, this is profoundly bearish, not just for the gold itself but also for the mining stocks. And since both gold and stocks are likely to decline, the prices of mining stocks are likely to truly plunge. Remember the epic 2013 and 2008 declines in miners? We’re most likely looking at something like that in the not-too-distant future. And the best time to prepare is already in the past. The second-best time to prepare is right now.
All in all, it seems that our profits from the short positions in the GDXJ and in the FCX are likely to increase soon.