PM Daily Market Commentary - 12/11/2013

By davefairtex on Thu, Dec 12, 2013 - 12:18am

Gold closed down -9.40 to 1251.90 on moderate volume, while silver closed down -0.14 to 20.27 on moderate volume.  The gold/silver ratio fell -0.05 to 61.75.  After the big move yesterday, gold gently dropped throughout most of the trading day, with one rally attempt failing immediately prior to the NY open.  Silver looked stronger and even made a new high of 20.48, but could not hold it into the close.

The dollar dropped once again, falling -0.08 [-0.11%] to 79.88, continuing its slow and steady slide, heading towards a retest of its 79 cycle low.

As I feared might happen given the visible distribution in the mining shares yesterday, GDX was hammered today, down a big -3.81% on moderately heavy volume.  Even though gold was only down a modest amount, miner traders took the opportunity to dump shares all day long, eventually retracing the entire amount of yesterday's move up.  As of right now, the shorts are still in control of the mining shares, with rallies being opportunities to sell.  Junior miners in GDXJ were off quite a bit less, down only -2.52%, and the volume was moderate.  This is somewhat unexpected and is mildly bullish.

It is possible that the GDX was dragged down somewhat by the selloff in the SPX, which dropped -1.13% on some pretty heavy volume.

PM looks good right now - I believe silver is the key.  It looks to be stronger than gold, and it is expected to lead any moves up.  If silver can continue making new highs, those miners should be dragged up kicking and screaming, and would be a good buy at these levels.  But if for some reason PM's rally ends here, miners will most certainly make another leg down.  They remain a high risk buy given the downtrend still in place.

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