Surf Report 9.3-3: The "Endless Summer" in Precious Metals and Miners

Silver Producers, SIL Part 3

Surfing can teach you lot of patience. First there is patience needed to figure out what kind of board to buy and where to buy it. I still remember buying my first long board from this guy who made them custom in Huntington Beach. I think he smoked a lot of weed and it was taking him forever to complete it. I counted months until he had it ready and near the end I was calling him nearly every day asking when it would be done. My patience was tested to the extreme waiting on that damn board! Then you need patience to find out where the best beaches are and learn the tides. Patience is again required while you learn how to paddle out to the break without drowning. Patience is vital to learning how to read the waves, pick the right one, and how to pop up on your board and surf it. Your patience will again be tested on days when the waves aren’t even there. A lot of people think surfers are laid-back and chill; its because surfing has taught them to be. Patience enters into every part of a surfer’s existence.

Patience is equally important when catching and riding Elliott’s waves. Its so easy to jump into a stock before it has fully bottomed. Or worse yet, get off a wave too early and before its largest extension higher has even started in earnest. Coulda, woulda, shoulda, didn’t. Famous investing legend Charlie Munger who was vice chairman of Berkshire Hathaway, the conglomerate controlled by Warren Buffett, from 1978 until his death in 2023 once said…

The big money is not in the buying and selling...but in the waiting.

-Charlie Munger

Gold has already broken out and has kept making higher highs with each passing week. Now we’re just waiting for silver to make a catch up move and breakout. This is also true with many silver and gold miners. We know the larger degree underlying trends that are in place and its only a question of how we get to the breakout and #silverqueeze. This is the time for patience. Are you going to remain patient? Surfing has taught me patience. I’m not going anywhere and will only be adding to my positions on pullbacks if those opportunities are provided. Of course I’m not advising anyone to make investment decisions here but only sharing my own strategy. Keep in mind the only options I’m trading are very long dated and the majority of my own portfolio is in physical ounces and shares. As you are assessing your investments, you also need to assess your ability to be patient.

Let’s now continue with the next batch of holdings in the Global X Silver Miners ETF (SIL). I’ve got a few new charts here we’ve never seen before that I think you’ll find interesting. We also have a few repeat charts that will get treated with more near term analysis at smaller degrees. But before we look at individual miner charts lets review silver since its been a while since we’ve reviewed its count with the wider subscriber audience.

Silver (an update)

Let me begin by saying there are many interpretations that can be made on how to count silver in the smaller degrees here. One can quickly get turned around on the micro counts and I admittingly can do the same and may have. I’m trying to keep it simple. As long as silver holds support above $30 it has the potential to accelerate much higher in the coming weeks and months. I see the $30.65-$31.40 as important Fib support in the Minuette degree. But I also see quite a bit of negative divergence on the MACD that is screaming for some sort of pullback here with a wave ii or even a deeper Minute degree ii which would totally demoralize and frustrate those who are invested in the metal and the sector as a whole. Its a potential count but not the primary one. It will be important to watch how silver corrects here as an impulsive breakdown below those levels I’ve outlined will signal the start of that wave C in the alternate near term bearish count.

Hochschild Mining (HOC.L)

We first reviewed Hochschild Mining in Surf Report 4.2 and did an update in the summary section of Surf Report 4.3 in the larger degree. Since those reports were published in early 2023 lets do another update on the bigger view first to see how things have turned out. In early 2023, we were looking for a confirmation of a Primary wave 2 bottom struck in November of 2022. Not only was there confirmation but HOC shares have rallied over 250% since and are now trying to break out of the long term downtrend line established in 2011. Please note that I have added an alternate count to the chart in the case that the larger degree count may actually morph into a three wave ABC diagonal structure instead of an 5-wave motive. The ride isn’t over for HOC by any means but watch out for that Intermediate wave (2) (or (B)).

Gatos Silver (GATO)

Some big news has happened with GATO since we looked at in Surf Report 9.5-2. On September 5th, it was announced that First Majestic Silver Corp (AG) and Gatos Silver entered into a definitive merger agreement in which First Majestic will acquire all of the issued and outstanding common shares of Gatos. Remember the wave structure we were counting showed GATO in a clear uptrend and we were previously looking for one more wave higher within Minor 3 of Intermediate (1). Zooming into the 144-min chart, we see that GATO has a nice i-ii start to Subminuette wave (v) within Minor 3. This should likely pull up AG shares as well in my view so long as support hold for this structure. Good news for both GATO and AG shareholders based on this particular wave structure since they are now tied at the hip in anticipation of the merger.

Silvercorp Metals (SVM)

Its been a while since we first reviewed SVM in Surf Report 4.1 then updated larger degree counts in Surf Reports 4.2 and 4.3. At the time of those reports published in early 2023, we were looking confirmation of an Intermediate low. I have updated this chart quite a bit as you can see. Although the rally from the low achieved in September 2022 appeared impulsive, I believe it was part of a (c) wave inside a wave 4 of a Primary 2 or B wave. That Primary low also had a truncated low in Minor 5 of Intermediate (C). Confused? I know its a bit messy but it does make the most sense in my view. SVM did achieve an impulsive 5 waves up and 3 corrective waves down from the November 2023 low which was what we wanted to see. Now price is currently trying to breakout into a wave of an Intermediate wave (1) within Primary 3 or C.

Adriatic Metals (ADT.AX)

Adriatic Metals is a brand new chart to this series and Substack as as a whole. ADT.AX is a precious and base metals explorer and developer that owns the Vares silver project in Bosnia & Herzegovina and the Raska zinc deposit in Serbia. Shares trade in London and on the Australian stock exchange. Here we’ll use the Australian ticker since that issue has a bit more price history in TradingView. Here we see a 5 wave Intermediate structure that has likely to have completed in a Primary wave 1. The Intermediate degrees are in turn subdivided into ABC diagonals. We won’t know how long Primary 2 will take, but we do know at some point there will be a tradeable (B) wave bounce and I believe its in a Minor degree B wave now. Remember that wave 2s can retrace deeply (up to 100% of wave 1 in fact is allowed in Elliott Wave) so its best be cautious with this one if you believe this count I’ve shown. ADT represents less than 1.25% of the total weighted holdings in SIL so it should have minimal drag on SIL performance as a whole.

Vizsla Silver Corp (VZLA.V)

Another new chart to this series and Substack is Vizsla Silver. VZLA owns 100% interest in the Panuco-Copala silver-gold project covering an area of over 7,000 hectares located in southern Sinaloa, Mexico. Let’s take a look at the larger degree count. At first glance, I considered that the top achieved November 2021 would be all of Primary 1 and Primary 2 was very short and shallow. Also if we considered the July 2020 high as an Intermediate (3) top, then we would be breaking one of the standard rules in Elliott Wave that wave 3 can’t be the shortest in duration. Therefore the way I’m viewing VZLA is that an Intermediate structure has yet to be complete and is working its way towards completing its first Primary wave / Intermediate cycle with Intermediate (5) filling out now. The Intermediate waves are then subdivided into ABC diagonals as shown.

McEwen Mining (MUX)

Not much has changed in the larger degree picture for MUX since we reviewed it in Surf Report 4.3. The August 2022 low held and there was a 5 wave rally that followed. That rally can be considered as either an A wave or a wave 1 in the Minor degree. Therefore we don’t know yet whether the massive Primary A-E triangle will remain valid for some time. If price does break out of the triangle and follow the yellow Primary count, we’d want to see another 5 wave rally in the Minor degree to complete Intermediate (1) followed with a corrective pullback. I’ve placed counts for what we would expect to see in either that more bullish case, or if the triangle structure remains in place.

GoGold Resources (GGD.TO)

Similar to SVM, GGD was reviewed in Surf Report 4.1 then updated in Surf Reports 4.2 and 4.3. At that time, we were looking for the September 2022 low to hold and begin another Intermediate degree rally to complete Primary 1. Unfortunately, price could not break out and the rally proved to be a corrective B wave with another lower low made in February of 2024. Given the depth of the decline, we need to now consider that that the decline from the November 2021 highs is not an Intermediate wave (4) but perhaps a Primary B wave within a larger 3 wave diagonal shown with the yellow count. We have seen a 5 wave rally off the February low followed by a 3 wave corrective pullback that held a higher low so that is a good sign that a larger rally may be forthcoming provided price holds support and begins to rally in smaller degrees from its current level. Now how that rally unfolds is still left to be determined.

Kingsgate Consolidated (KCN.AX)

We last looked at Kingsgate in Surf Report 4.3 where we identified what could count as full 5 waves up from the 2016 low. Price has been still consolidating for Kingsgate Consolidated (no pun intended) since the January 2022 high. I can’t say with any certainty yet that KCN is truly finished with that consolidation but I will say I have updated my count on this one given the structure that’s been unfolding. I no longer believe this consolidation to be part of an Intermediate (2) but instead think it may be a lengthy Minor wave 4 with one more wave higher to be seen to complete Intermediate (1). Typically wave 2s retrace deeper than the 23.6% Fib level so given the shallowness of this consolidation this new interpretation of the count now has higher potential in my view. In the premium content in this report we’ll dig into the smaller degree count for this particular count and review the parameters that help us determine which path will become the most likely path as I think it will be a good learning exercise.

Summary

As I mentioned in my introduction we will need more patience with Silver and some of these silver miners reviewed in this report. Some charts such as HOC, GATO, SVM, VZLA, and MUX appear to be continuing their larger degree bullish uptrends provided their support levels hold. Others such as ADT and perhaps KCN are showing the potential for lower lows in the interim. Let me remind you that we are now looking at only 8 holdings in the SIL ETF in this report and and the total weighting of this set amounts to only 8.6% of SIL as of Friday’s close which isn’t a lot. The largest holdings of SIL such as WPM and PAAS, as well as Silver itself will certainly drive the overall path for silver miners in general so we need to be sure to keep an eye on those. We’ve now reviewed 24 of the 33 Silver miners contained in the SIL so we’re making really great progress. We’ll likely finish up in the next SIL Surf Report 9.3-4 and then revisit major holdings on occasion as we finish reviewing all the remaining holdings in the other Precious Metal and Mining company ETFs GDX, GDXJ, and SILJ.

I hope you enjoyed this Surf Report and found it informative. The next few weeks will be quite busy for me so I may or may not have another Surf Report published until late October. If that becomes the case, we’ll make it up in the future with an additional report between the bi-weekly report cadence I’ve maintained so far. The next Surf Report 9.4-3 will cover the next batch of holdings in the GDXJ ETF. I certainly appreciate your patience! These reports take a lot of time to prepare and I’d rather not slap something together just for the sake of publishing a report.

I’ve continued to add more short term updates to many charts in this series which are linked within the downloadable Surf Report file for premium subscribers. I greatly thank those who have subscribed already!

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 SVM and GATO which were analyzed here.

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