Chart 1: Precious Metals sector is breaking out of its downtrend
The technical downtrend that has persisted in the Precious Metals sector since October 2012, as QE3 was initiated, seems to be finally be coming to an end. So far, three out of the major four assets within the sector are breaking out, from the technical perspective. Gold is just joining the party as of yesterdays price move, while Silver continues to hesitate for now.
How do we know if the rally will be sustainable?
Wel, we never do. Investing is about probabilities. Having said, the chart below shows that Gold miners are showing decently strong participation during the current rally. More and more components out of the index are breaking out above the 50 and 200 day moving averages – something we haven’t seen since middle of 2012.