We’re getting there. Inch by inch, we’re moving closer to the tipping point of the decline when the slow, regular, and somewhat boring move lower turns into a violent drop. Yesterday’s session was still in line with the less exciting manner of declining, but we saw another crack in the dam that’s still somewhat holding the prices at the current levels. It doesn’t seem that it’s going to last for long. Are you prepared?

Gold is likely to drop far in the next 2.5 weeks.

Having said that, let’s take a look at yesterday’s price changes (charts courtesy of http://stockcharts.com).

Miners’ Underperformance Completes the Bearish Case

On Monday, we commented on the above chart in the following way:

The GLD ETF ended the session only $0.40 higher and since its opening price was above the closing price, Stockcharts marked this session in black. As we emphasized yesterday, these sessions may – and recently did – indicate the end of the brief upswing and the beginning of another wave down.

The SLV price outperformed on an intraday basis by rallying almost to Tuesday’s (July 31st) intraday high, while the GLD price was not even close to its July 31st high. That’s yet another bearish sign as silver often outperforms in this way just before declines.

We haven’t seen underperformance in mining stocks, but their performance has not been particularly strong either. The GDX ETF didn’t invalidate the breakdown below the previous 2018 and lows and it bounced from the 2017 lows in a rather inconclusive manner. Overall, it seems that we haven’t seen any convincing signs from the mining stocks’ Friday price action.

With bearish signs from GLD and SLV and a neutral one from GDX, the overall implications of Friday’s intraday action, are bearish.

Now, based on yesterday’s profound decline in mining stocks, we can say that the relativity-based outlook is completely bearish. We have all the confirmations from the relative valuations that we could get. Silver outperformed on a very short-term basis and mining stocks underperformed in a very clear manner. And if that wasn’t enough, the GLD ETF repeated the bearish black candlestick that heralded declines multiple times in the previous months.