Gold and Silver Miners: Are They Ready to Break Out?

Welcome to this week's special presentation titled Precious Metals Rebound: What Traders Should Watch Next. My name is Todd Schaefer, manager of research here for Vectorvest, and I'll be your introducer this afternoon. Maybe you've noticed in your Vectorvest program that the top VST stocks have a substantial number of stocks from the mining, silver, and gold industry. Steve Chapel noticed too and gave a great presentation on the topic to our community room and our YouTube subscribers on Wednesday of this week. If you'd like to watch it in its entirety, you can find it on our YouTube page as the midweek update session. It was so good I want to share an edited version of it with you today, which I think amplifies the most important parts. So, let's get to it. Here's Steve's presentation. We're seeing a lot of movement in the miners today. Uh so that's why I wanted to talk about them. I think it's largely in relation to not just that, but that's probably the um the trigger point for today. You know, already the war appears to be at least winding down whether it's going to end good or bad. You know, there's other things that are going on out there, but certainly the miners are starting to catch some tailwind and have been really for about a month now and are kind of resuming that tailwind. So, wanted to take a peek at those today and and see what VectorVest has to offer and in displaying some of the better uh potential candidates for you guys and then just go from there. So, first things first, you always want to kind of take a look at the overall group and even, you know, the uh the underlying instruments. I can probably just go to CNBC. And when we come out here, uh, what I'm going to do is go find gold. And we can click on either one of these guys. But you can see gold's up 2.83% today. Silver's up 2.85. Uh, we click on it here, we can look at a little bit of a longer view. You can see over about the last month, we're starting to pop up and head back to some interesting levels with gold getting back up over 4500, which is a enormous move for the gold market to be moving these kinds of percentages in a single day. It's not uh it's not typical. Uh so there's there's some pickup and excitement here on for the gold bugs. And then of course uh if we kind of back out of this and then also look at silver. Silver is getting back towards the mid60s and we can see that you know we're moving or shifting from downtrends into prevailing uptrends. So we've got some tailwind behind us before we even get to these big days. Uh so you know it's worth taking a look at them here again because when we get over into Vectorve Vest uh the next thing the next logical place to stop would be just taking a look at the miners index so we can look at you know it used to be that the gold bugs the Huey was always the big index that folks uh looking at gold and silver miners in particular uh would consult would be the Huey chart. Um, in this current time, you know, things have kind of transitioned, at least in the mainstream, you know, more towards the GDX or the GDXU and, you know, those kinds of u ETFs. Uh, but in either case, they're really going to display round about the same thing. You know, the magnitudes of change can be uh slightly different, but the shapes, you know, are all really going to be the same. So, uh, if we look at that, I bring that up because we only get the Huey index numbers after the markets are are closed up. So, you can see here with the Huey, the gold bugs index, you know, the overall movement had been down, then we started to form what's known as an inverse head and shoulders. Okay? So, downtrend is switching to uptrend. We're starting to get higher highs and higher lows. Uh so you have this left shoulder that says the downtrend is continuing to head lower because then you come next comes the head and now the lows have stopped moving lower down the page. Now you're moving to higher lows. So that's where the right shoulder is formed. And then when the neckline is broken uh the trajectory of the market has changed. It's shifted from down to up. So in this case you know that's bullish in and of itself. Now you have kind of a flag type situation going where you have this pole and prices are kind of flagging out to the right. Now I mentioned just moments ago we don't get the update here till the markets are closed. So what it doesn't show is what I'm about to show next with just GDX. And this is what it will look like you know as we uh as we get that data later on today. So here's that same poll. Here's the sideways consolidation of that very strong early run. And now what we have is sort of reignition or relift up and out of this consolidation to higher prices. And generally speaking, these markets, assuming that no new narrative has, you know, shifts the wind from tailwind to headwind, you know, generally you run about the height of the pole coming into the sideways pattern out the backside here. So, in other words, I would expect that, you know, this is not just a a one-day blip. We are in fact heading into more upside to come. Now, it doesn't have to be day by day by day, you know, certainly um with with gold miners, but overall, we should be moving higher. And so, when we look at this then, no matter which one we look at really, we can then start to put our gold analysis on here that we like to lean on to capture the big more macro trends, and that's called the Midas Touch. So when I come over here, what that's going to do on once I get it on, it's going to put a couple of moving averages up top here. So you've got a 10day and a 65day. So a two week versus a one quarter view of stock price movement. And what we're about to see here right now is the 10day overcome the 65. That's part one of a two-part system of timing. Uh the second part and the confirmation part is down below. This is a 40 period moving average of what we call here at vectorve vest relative timing. Everybody in the community room should know that but maybe some folks on YouTube are learning learning this for the first time. Okay. But relative timing looks at the short-term price trend magnitude of movement and so forth of the composite above. So in this case it would be of the Huey. Okay. And what it does is extrapolate that down into a formula that gives us an idea of whether something is moving up or down. and how fast it's moving up or down. Okay, so we are watering that down a bit with the 40 average, but the idea there is to get a more of a true direction, particularly with something that bounces quite as often as as a Huey index would. And so when we look down here, what we can see is based upon this lift, this moving average is down here is likely to cross up as well. And so we're kind of getting to the situation where it's u well in this case not a failure rate but a high likelihood that something's going to happen in the future because it's based on a moving average. So for example if we go back to the prior time that we had up signal that would have been right here on the graphic you have situation where price is elevated. They're not elevating as quickly as they are now. That's one observation to make. And even though prices began to recede before going higher, what did the moving average of relative timing do? It continued to head higher. So, what I'm pointing out is if we lean on that experience and we h I don't want to say prognosticate, you know, what I want to say is leverage that experience and realize that that means, you know, we're extraordinarily likely to see follow through on both the upper crossovers of those moving average as long as well as the uh the crossover down below. [snorts] So the more updates. So again here with the Huey, we can't see what's happening after this most recent day. If I um put the GDX over here into this layout, we can see it here. Okay. So you've actually got the crossover up above. And again, you know, it's very quick to follow. within probably the next week, week and a half or so should be the crossover of the RT here down below. So, one can wait on the signal and be absolutely sure or one can use a pretty educated guess to understand that that is extraordinarily likely to happen. Whichever camp you fall into is just fine. You have to realize what you're doing when you do that. >> Okay. Um, but the other thing that I would say is maybe to lean a little bit more heavily on this idea that prices are likely to continue following through here is how many times when we've come down this low and started the upward track have we failed to move considerably higher on the miners index itself. And when you look back at that here as of late, you know, since um certainly over the last couple of years, things have followed through quite nicely. So expecting anything different I think would be u would be a a tough case to defend. The other thing I would say is we have come way down on the scale comparatively to the prior four times that this has occurred and it's like stretching a rubber band. You know, you can only stretch that rubber band so far before eventually it just snaps out of your hands. And so we have this situation here where yes, prices pro well did go unreasonably high at least in terms of speed too quickly, right? Same thing can be said for this pullback. It probably went a little bit unreasonably too low. And so what we're doing now is regressing back towards that mean at minimum. Um but again with some of the macroeconomic forces that we're talking about and this idea that well does anybody out there believe that the Fed isn't going to print more money, right? So and uh and likely already has you know to help salvage the the yen. So, you know, that's uh that's what we're looking at here and we're sort of seeing that uh seeing that go in real time. So, the next logical step is to go out there and look for some good miners or even the indexes themselves as possible trading opportunities here over the the short to near term. So, I'm going to do is go to the next layer and that is we've got good timing beginning to brew here. let me at least get some candidates ready whether I want to start on those right away or wait until we're a little bit more sure. You know, that's certainly something to consider. But I really don't have to go any further than I believe uh the homepage at this point. And so if I look at the top VST stocks on our homepage for Vectorve Vest, I'm starting to see miners everywhere you look. So, I'm just kind of highlighting them all right now. Of the top, I don't know how many this is. Maybe 20 VST stocks. Holy smokes. One two three four five six 7 8 9, 10, 11. And I don't think I missed any. 11 of the top 20 or 15 or so stocks. Anyway, I guess there's 1 2 3 4 5 6 7 eight that aren't. So, uh, looks like 11 of the top 20 or so stocks are are are minors. And so, that's a heavy percentage. And it's not just one, you know, that's making incredibly good gains today. If you look across the board, the biggest mover is, it looks like nine and a quarter. And the uh, puniest of the movers is uh, just shy of 5%. you know, so these these things are on the move. And so what we can do next is lean into vectorve vest analysis to see, you know, kind kind of separate the wheat from the chaff, if you will. Uh try to identify the ones that are doing the best job of making money and that's the ones that we want to put our money into. Uh so one thing that we can do is just put these stocks into a watch list just right here from the homepage. So, I just right click on the ones that I highlighted here. Here are all those symbols. I can then come into uh afternoon market action. And today, we'll make a new watch list. We'll call this gold and silver. Okay. And so, I'm going to put them into that watch list right there. Bang. Done. Now the next thing of course that we could do is go into unis search start running more scans. Another thing that you can do is you can um rightclick view stocks in that industry group or even sector. Okay. And so if I go to view stocks in the industry group now I'm looking at mining gold and silver. And when I do that I've got access to 236 stocks. So, of those 236 stocks, you know, which are some of the VectorVest favorites? Well, the nice thing about VectorVest is that they go right to the top of the list. Okay? And so, they're already ranked from top to bottom in overall quality. And when I say overall quality, the ones at the top of the list have the best combination of upside potential. They're less risky than the others, and they're moving up the page at a good speed. So the the highest combination of those three factors. So RV is your upside potential. Your RS is your indicator of risk, right? And so the higher the number, the less risky based upon their earnings and earnings performance and you know their financial performance. And then the relative timing is your price direction and momentum and magnitude of that direction. Uh so again in a way it's kind of looking at velocity right so when we look at this whole package that's how they're ranked we take all three of those factors and put the highest combinations at the top. So what we can do next is we can look at a few of these guys near the top or it really depends on you as an individual. If you're most interested in, hey, just give me the stocks that have the most upside potential of all these stocks of all 236, you can click on RV and that would resort the list and put uh, you know, some new candidates right at the top. And so we've got Heckla, Kin Ross Goldfields Alamos Anglo Endeavor, and there's some really good picks right here. One of the things that it's done over on the right is it's given us high combinations of earnings per share or the bottom line along with extraordinarily high growth rates even among their peers. Okay? So when we look at earnings growth here, we're looking at 43, 38, 36, 35, 43, 37. So for the folks out there on TV and other places telling you that these companies are no longer making the kind of money that they were just months ago, uh earnings growth is indicating a completely different story. >> Okay, earnings growth is as good or better than many of the tech stocks and even AI stocks that are out there. Uh so this is still a market segment that you do not want to ignore. U it seems like I've been uh speaking to a wall at times when when trying to inform people of this, but it's it's just undeniable. At some point, earnings matter, and earnings is the engine that drives stock prices up the page for the long term. So you can have abnormal or irrational cycles, but you can't have abnormal or irrational years, you know, or decades, for example, right? So at some point facts matter, you know, reality comes back into view. And so when we look at this um these are the stocks with the highest upside. We can come out here and we can look at a hecka mining for example. Now what I'm going to do is switch gears. We're not going to look at the Midas touch anymore. What we're going to do is more of just your simple vectorve vest analysis because that's all you need. And then we can try to layer on that a little bit if we want to. Okay. But what we have here with Heeka, we have a stock that certainly, you know, the industry rising tide lifts all ships. Falling or sinking tide lowers all all ships just the same. No matter whether you're the big battleship, you know, or you're the little dinghy among these 236 stocks, you know, the eb and flow of the of the market and the eb and flow of the industry that you're in are going to have an impact. And so even the mighty heckla who has absolutely zero debt uh and tremendous growth, you know, got drugged down with it. But this is going to be one of the better opportunities on a go forward basis because when we look at earnings, earnings direction is very strong here. [snorts] If we layer on top of that earnings growth, earnings growth is accelerating, not decelerating. So we're at 43% 44% and rising. Okay. If we look at uh sales growth and so forth, we can we can continue to to go, you know, peel into the onion more and more if you want, but really at this point, that's all you really need to know. First thing and foremost, the bottom line continues to move up the page even as stock prices came down, right? So, we have a stock price right now that's trading at 1986 on let me click the date line here on 91 cents of forward earnings. Well, it wasn't long ago it was trading at 34 on 75 cents of forward earnings. So, are we getting a better deal on Heckan now with rising earnings? The answer to the question, if you haven't guessed, is yes. Right? So, investors were willing to pay $34 for $71. Now, you're at $19 and you have a forward 91 cents of actual earnings on this stock. Okay, that's a really really good situation to be in to be looking for something to buy. Buying something cheaper that has more inherent value than it did in the past. Okay? So, if I put value on here, value continues to rise, prices came down, that creates opportunity. Okay. All right. Let's go to the next one here. Ken Ross has always been one of my uh you know, one of my favorite go-tos in this space, even from back when it was, I would think, considered a junior miner because I started trading these guys back when they were in the three to5 neighborhood and I've traded them quite often since then. Uh but, you know, all the patterns and shapes are going to look very similar. Um they're all going to have a pop, kind of a sideways action and kind of a repop that's just getting underway. So, what's exciting about them, I think, right now, is this whole repop. You know, we could be on the be very beginning of this next leg higher. That's why I wanted to bring these to your attention today. At least get them on your radar. Uh sometimes you might wish to kind of just let things settle down again and get into that sideways move and try to position, you know, um off of a little bit of a pullback or something. That's actually what I prefer to do on the bulk of my trading, but on occasion, I'm also willing to take the pop. And uh we took we took the pop today. Uh we'll see how that go how that works out. But I bought the GDX uh today, you know, this morning and we'll see how it goes from here. Um, I would have preferred to get a pullback, but I was like, well, you know, everything's really moving here and um, it's always hard to know exactly which one's going to do the best, you know. So, I just bought the whole the whole index with the GDX. And now, if I were going to pick individual miners, we're kind of looking at how I would go right now, which would be the high relative values, because they're the ones that can get moving up. They're the ones that can really heat up and outperform, you know, the other ones. And again, it's because of the not so much the debt situations as it is the earnings and earnings growth situations. So, they're uh they're tremendous. Uh Ken Ross is the number two position. When we [snorts] look at this next one here, this is going to be Goldfields. There's Dr. David Paul right there. So, his is actually moved up into a better position than it's been in a long while. Um I don't remember this one being up in the top three very often when I'm looking uh by way of RV, but it's it's there now. So, we hope you're watching uh from above. Dr. David Paul, I miss him. I miss him dearly. But in any case, uh earnings are doing uh pretty well and we are accelerating, okay, which is good to see. Not quite like we were back here, of course, but but it's good to see earnings growth continue to, you know, try to push on up into that right hand edge. So, when EPS and and growth are doing that, that's what you want to see. All right. So, this is my idea for you guys for today is to give a look at this space and basically as long as you're favoring stocks, there's going to be a lot of great choices. And so, I'm not going to get in here and try to um you know, say this one is absolutely going to be the best over that one. Number one, that's kind of a fool's errand. Uh number two, we can though get into a situation where we can say these 10 or 15 stocks as a group are very likely to outperform these 10 or 15. And the reason is well maybe not so much just yet because the numbers are still pretty similar. [laughter] So so maybe the top 50 they're making so much money in this space it's actually kind of crazy when you look at it. the uh look at these earnings growths all the way down the board. I mean, I'm going I'm getting I'm at the bottom. I'm at the bottom before I find anything in the single digits. Heck, most of them at the bottom are still in the 20s, you know. So, is this a healthy group or is this a healthy group? You know, most of them are making money. That's the bottom line, the EPS number. There's a few, just a few, a smattering, like a handful of the 230, I've only got a hundred. That's why, [laughter] well, of the top hundred there's only five that aren't making money yet. That's pretty amazing. And of the top hundred, there's only again a handful, a smattering that don't have at least double-digit earnings growth rates. And the vast preponderance like say 90 or more have even better earnings growth than that. Isn't that amazing? Wow. So definitely a group that you want to give uh give some attention to. I think anyway markets are up. That's good for miners by the way. At the end of the day they are corporations you know so they do they do have headwinds like higher oil prices. They do have you know inflation. So that that's a that's something not to lose sight of you. You you don't you know minor if if we get into a freef fall market somehow miners will freef fall too regard even regardless of what the spot price is doing often times. U now if the spot price is well more than compensating for that somehow that'll be a unique experience [laughter] and we'll see what happens then. But that's not that that's not what happens historically. So, you know, we want the markets to remain buoyant here to be interested in in these miners and we want the industry rising, which it is, and we might want just a little bit more confirmation of that uh with the uh with the Midas touch crossovers to be absolutely sure. And then we're probably, you know, should that happen, we're we're in line for for a pretty good run, I would think. And uh so there's time, you know, there's no reason to rush in this space. It seems like um anytime I'm talking about something, I have this overwhelming feeling that the people that are watching me feel like they have to go pull the trigger on some of these things right now. And that's usually not not the case. You know, what we're doing is trying to inspire you on uh segments of the market that you ought to be looking at. Give you some ideas. Get in there, sort it out. Relative value will give you a great engine. And um I've even done prior special presentations where uh where we've featured that um and and they tend to outperform, you know, over the short term. Relative safety is going to give you, you know, much better longer term performance. And a high combination of those two can hardly go wrong. Well, thank you, Steve. That's really great stuff and timely, too. Folks, I can think you can see why I wanted to share this session with you. Just a taste of what we do here every day at Vectorvest. And we look forward to helping you find success in the future. Thanks for watching. [music] [music] >> [music] [music] >> Yeah.