Not all observers have bleak outlooks on the mining ETFs, though. In reference to GDX and GDXJ, “these markets sitting between strong support and strong resistance. At current prices, GDX has 12% downside to its daily closing low while GDXJ has 21% downside to its daily closing low,” said Jordan Roy-Byrne.
While there may not be an excessive amount of good news for precious metals bulls, there is some and that includes what appears to be an ongoing bottoming process.
“The good news for precious metals bulls is this market remains in a bottoming process which should produce a turning point that is on par with those seen in 2000 and 2008. The bad news is we are already five months into this bottoming process and it can continue for several more months. We don’t see widespread news in the sector but it is possible that GDX makes a new low but not GDXJ. It’s possible Gold makes a new low but not Silver. Major divergences are common at major bottoms,” wrote Roy-Byrne.
To truly excite new buyers, GDX would have to string together closes above the $31 area, something it was unable to do even when the Federal Reserve made the no tapering announcement. However, both GDX and GDXJ look vulnerable to violating psychologically significant support areas. GDX at $25 and GDXJ at $40.
Market Vectors Gold Miners ETF
ETF Trends editorial team contributed to this post.