Surf Report 9.4-2: The "Endless Summer" in Precious Metals and Miners

Junior Gold Miners, GDXJ Part 2

It certainly has been a rough few weeks in the precious metals complex hasn’t it? I hope you aren’t packing up your board just yet though before the real nice waves start rolling in. In case you weren’t aware, precious metals and mining stocks have a real tendency to “suck” much of the time. There can be long periods of time where they slowly decline in corrective wave 2s, 4s, and B waves. They will wear out investors though boredom and decay. Then all of a sudden a wave 3 or 5 starts and BOOM!! Everyone shows up to catch the epic break!

As some of you know I am a Navy Reserve Officer. In the military, “embrace the suck” means to accept and work to improve a situation that may not be ideal. Navy SEAL instructors at BUD/S (Basic Underwater Demolition/SEAL) training use the phrase to teach students to get comfortable with discomfort and lean into suffering.

In ocean surfing, “embracing the suck” means that we must learn to enjoy frustration and accept that negative experiences are necessary for growth. Here is a surfing lesson on embracing the suck that I thought we can learn from as we ride our Elliott Waves in the precious metals and mining sector.

This video talks about how important it is to understand what you can control. A surfer cannot control the waves just as an investor cannot control the market or price action. As we ride Elliott’s waves, its usually emotions and sentiment that get in the way and cause us to “wipe out” by selling low or buying high. Focus on what you can control. Are you in control of your emotions and your sentiment?

I will suggest that investors that are interested in this sector would be well-advised to “embrace the suck” on some of the corrective pullbacks we may be “suffering” through. That is not to say all consolidations should be embraced. Avoiding larger degree declines is always warranted. What it does mean is that at the current wave degrees we are seeing, the “suck” is actually a positive thing to endure as it gives us more time to accumulate more ounces and shares at lower levels before much bigger moves higher occur given the larger degree underlying trends that are in place. Use these corrections to learn about your own emotions and sentiment. Strategize to lighten up on positions on the next wave higher if you are getting stressed out. If you are losing sleep that’s probably a sign that you are too overweight the sector for your own comfort and personal risk tolerance.

Now let’s continue our review of the VanEck Junior Gold Miners ETF (GDXJ). We have quite a few new charts today but first we’ll do an update on GDXJ.

GDXJ Update

In Surf Report 9.4-1, we had assumed all of wave (iv) was complete within Minor degree wave 3. The rally from the June lows did not complete 5 waves up with a corrective pullback as we would have liked to have seen and instead broke the prior low in (iv). Therefore that rally should be considered as an extended b wave within (iv) with wave c now finding its way to completion. The impulsive structure within Minor degree wave 3 still remains but were are seeing a deeper retracement just below the 38.2% Fib support. The MACD is curling up once again so there is potential for wave (v) of 3 to restart once again. The overall Minor degree structure is far from complete.

B2Gold Corp (BTO.V)

B2Gold Corp is a new chart we haven’t looked at yet in this series or any others for that matter. Founded in 2007, B2Gold is a low-cost international senior gold producer headquartered in Vancouver, Canada with operating gold mines in Mali, Namibia and the Philippines, the Goose Project under construction in northern Canada. The company also has numerous development and exploration projects in various countries including Mali, Colombia and Finland. I’m viewing the larger degree structure as a Primary ABC diagonal but am open to an 5-wave Impulse in orange. In either case we should likely see an Intermediate wave (C) begin which would be subdivided into a 5 wave structure in the Minor degree. Price still needs to make 5 waves up and break out of the ending diagonal or risks a slightly lower low for Intermediate (B). Friday’s price action makes me think this is the highest probability at this time.

Zhaojin Mining Industry Co Ltd (1818.HK)

The larger degree count was reviewed for Zhaojin Mining Industry in Surf Report 9.2-2 so now we’ll take a look at a more near term view with 144-min timescale. Minor degree wave 2 on Intermediate (3) is now in progress. We’ve likely have seen most of the (a) wave complete and should get a good (b) wave bounce soon. Only if we see a full 5 waves up and followed by a corrective pullback will odds increase that all of Wave 2 is done. We’ll have to watch and see.

Osisko Gold Royalties Ltd (OR)

Another new name we haven’t reviewed previously is Osisko Royalties which is an intermediate precious metals royalty company focused on operations in the Americas since June 2014. Osisko holds a portfolio of over 180 precious metal royalties, streams and offtakes. OR made an all-time low in price in March 2020 during the COVID-19 market sell-off. Since them price has been in a consistent uptrend with a very nice Primary 1-2, Intermediate (1)-(2), and Minor degree 1-2 setup in place. Price is now attempting to breakout from both Minor and Intermediate Fib resistance. I’m curious to see if the channel uptrend will remain in place as the wave 3s and 4s fill out to complete Primary 3.

Hecla Mining (HL)

Hecla is becoming a more frequent guest across this series with chart reviews in Surf Reports 9.3.1 and 9.5-1 for SIL and SILJ respectively. In Surf Report 9.5-1 we were looking for wave (ii) to complete its structure. However like GDXJ, the rally from the July 2 lows was corrective and has proven to be an extended b wave within a bigger wave (ii). So far, support at the 61.8% retracement level has held and we’re looking for 5 waves up in the smallest degrees as first indication that HL is ready to begin the next wave higher.

Eldorado Gold Corp (EGO)

We last reviewed Eldorado Gold Corp in Surf Report 4.1 which was published in January of 2023. Then we were looking for an Intermediate wave (3) to continue and price to pullback in a Minor degree 2. Well not only did EGO complete a Minor degree wave 2 pullback just below the 38.2% Fib retrace in October 2023, Minor wave 3 of Intermediate (3) began with price now attempting to break out of Minor degree Fib resistance. We got the count right. Lets keep watching.

Perseus Mining Ltd (PRU.ASX)

Another chart we are reviewing for the first time is Perseus Mining. Perseus is an Australian mining company that currently operates three gold mines in Africa: Edikan in Ghana, and Sissingué and Yaouré in Côte d’Ivoire. The company also owns and operates the Nyanzaga Gold Project in Tanzania and the Meyas Sand Gold Project in Sudan. Price made an all-time in December 2014 nearly a year before Gold itself did. The overall Intermediate structure that followed is remarkably similar to Gold’s as well except that Intermediate (4) presented as a running flat correction. As you can on the chart, the entire Primary 1 structure is filling out an ending diagonal pattern. PRU has broken out of Minor degree Fib resistance and has a bit more work to do to finish up Minor wave 3 of Intermediate (5).

Equinox Gold Corp (EQX)

Equinox Gold Corp. is also a new chart for us to review. The company engages in the exploration, acquisition, development, and operation of gold, silver, and mineral properties in the Americas. It holds interest in properties in California located in the United States; Guerrero State located in Mexico; Maranhão, Bahia, and Mina Gerais state located in Brazil; and Ontario, Canada. The company was formerly known as Trek Mining Inc. and changed its name to Equinox Gold Corp after the 2017 merger. Share prices for EQX made all time lows in November 2022. Since then price has rallied in an overlapping structure that leads me to believe we’re likely seeing a diagonal. I am open to a larger impulse in the Minor degree but this will take some for us to see which count becomes the valid one. There is a potential (i)-(ii) setup in place for an upcoming rally but the previous lows made in February 2024 will need to hold.

Filo Mining Corp (FIL.TO)

On July 29, Filo announced that it would be acquired by BHP and Lundin Mining Corporation for an acquisition price of CAD 33.00 per share. I’m showing the completion of the Intermediate degree count simply for educational purposes. We also see some nice examples of alternation between the Minor degree and Intermediate degree wave 2s and 4s. FIL.TO still had some room to run in Intermediate (5) of its very first Primary degree structure if it were to complete a full 5 waves in the Minor degree. I guess we’ll never know. Congratulations to Filo shareholders who bought down at the 2020 wave (2) lows; y’all had an incredible run in just a few short years!

Summary

Despite the precious metals and miners “sucking” lately, the major upward pointing trends and wave structures remain present in the charts we reviewed in this Surf Report. The major lows of late 2022 and the higher lows of February 2024 have held for many miners reviewed in this report and one should not be surprised when miners begin to play catchup to gold’s price strength. Consolidations like the ones we are working through may suck, but they are quite constructive and should be viewed as buying opportunities. Embrace the suck my friends. The next report will begin reviewing the next batch of holdings within the SILJ ETF. Then before we circle back to GDX, we’ll start a new “update” series for the Uranium sector which we’ll review periodically as we continue “Endless Summer.” I hope you enjoyed this Surf Report and thank you for subscribing to this effort!

Until next time…

Cheers and #EndTheFed!

-Hypersonic78

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Disclaimer: None of this is financial advice! Please do your own diligence. The views expressed here and other Surf Reports are my own. Only risk what you can afford to lose in these crazy markets. Know your timeframes, parameters, and personal risk tolerance.

Position Disclosure: I remain long physical silver and gold (mostly silver) and am long a handful of individual precious metals mining shares including HL which was reviewed in this report.