Surf Report 9.2-5: The "Endless Summer" in Precious Metals and Miners

Senior Gold Producers, GDX Part 5

Robert Harold "Nat" Young was born on the 14th of November in 1947 and is one of Australia’s legendary surfers. Born in Sydney, New South Wales, Nat grew up in the quiet coastal suburb of Collaroy. As a young surfer, he made waves early on, finishing as runner-up in the Australian junior championship at Manly in 1964. Just two years later, in 1966, he claimed the world surfing champion title—a feat he repeated in 1970, back when it was known as the Smirnoff World Pro/Am. Young dominated the Australian scene; snagging national titles in 1966, 1967, and 1969, and taking home the Bells Beach Surf Classic crown three times. Beyond the scoreboard, he left his mark on surf culture, starring in iconic films like the 1973 classic Crystal Voyager and playing surfer Nick Naylor in the 1979 Aussie drama Palm Beach.

As we continue to learn about surfing legends, surf spots around the world, and important details within surf reports, I thought it would be good to introduce y’all to this legendary Australian surfer. Nat Young is known not only for his groundbreaking contributions to surfing but also for his insightful and often philosophical reflections on the sport and life. It seemed relevant because in this Surf Report covering additional holdings in the within the VanEck Gold Miners Equity ETF (GDX), we have four Australian Gold producer charts to review. Three of these have been covered previously in Surf Report 9.4-4 for GDXJ but we also have one new chart to look at in the larger degree. Consistent with our process, we’ll update near term charts for holdings that have been previously reviewed in the larger degree. Although surf reports and scoping out the waves at the beach can be useful to determine whether the waves are breaking in a desirable fashion, sometimes you just have to paddle out and try few. In Elliott wave that means we must try our best to analyze these waves and set appropriate parameters to maximize reward while minimizing risk before putting hard earned money to work. As Nat Young so succinctly stated, “if in doubt, paddle out…”

GDX update

Back in early December when Surf Report 9.2-4 was published, we were looking for the low in Minuette (iv) of the Minor degree 3 wave structure. I told y’all “the rally in GDX is not over yet” and was looking for a rally to begin the Minuette degree (v). We now have a Subminuette wave i complete and are looking for confirmation that the low in wave ii is complete. We still need to see a bit more off that local low with a breakout above the wave i high to confirm. I’m placing a larger wave extension box around where the top of Minor wave 3 will settle. Typical Fib extensions for wave 3s are between 1.236-1.382 but its also typical for commodities and precious metals related assets to overextend higher. Surf’s up in GDX folks once a low in wave ii is confirmed!

Dundee Precious Metals (DPM.TO)

We last reviewed DPM.TO all the way back in Surf Report 4.1 published in January of 2023 and over a year before we started the Endless Summer series. Before diving into smaller degree wave counts, let’s se what has unfolded in the larger degree wave structure first. In Surf Report 4.1 we were looking for a fuller 5 waves up to confirm the low in Primary 2. Not only did Dundee make an initial 5 waves up to complete Minor degree 1, but it also had a nice corrective pullback in Minor degree 2. It may now be completing a wave 3 of a 5 wave structure in Intermediate (1) or could be extending into a larger (A) if Primary 3 is following a similar 3-wave path as Primary 1. In either case the larger degree, count looks bullish in my view. Just be careful of the wave (2) or (B) consolidation waves. Don’t catch any knives on those types of waves if you can help it! Even though Dundee is Canadian miner with assets in South America and Europe, I’ll consider it to be an “honorary” Aussie with a name like Dundee… “that’s not a knife, THAT’S a knife!”

Capricorn Metals (CMM.AX)

Our first Australian gold miner for Surf Report is CMM.AX which we previously reviewed the larger degree wave structure in Surf Report 9.4-4 covering holdings in GDXJ. Let’s now zoom in a bit to the 3-hour timeframe for a closer view of the smaller degrees that are filling out. Subminuette wave v of Minuette (iii) appears to be underway before we can expect the next consolidation wave (iv). More structure is still needed overall to complete Minor degree 5 of the larger ending diagonal structure. However as you can see from the chart, this is turning into a very large diagonal which once it completes, can have a meaningful correction. We will need to asses how that correction unfolds to determine whether the coming wave 4 is of the Primary or Intermediate degree.

SSR Mining (SSRM)

We last reviewed the smaller degree structure in SSRM back in Surf Report 9.5-3 published in early November 2024. At that time we were analyzing the potential wave structure in a corrective rally in Minuette (iv) of a larger degree downward Minor degree 3 structure. This downward structure would invalidate if price rallies above the wave (ii) high $17.76. I initially expected a 5-wave rally in Minuette wave c but the structure morphed into a series of subdivided diagonals. Price is also now approaching the Fib pivot level from the (i)-(ii) declining structure in Minor 3 down. I’m now looking for a potential top in wave (iv) here but let’s watch for a more bullish breakout and invalidation of the larger degree downward structure. I’ve placed that bullish alternative count of what that may look like in that case.

Ramelius Resources (RMS.AX)

Our next Australian miner is Ramelius Resources which is another miner that we have not looked at during this Endless Summer series or anytime prior. RMS.AX is a Western Australian gold producer that has been listed on the ASX since 2003 and has been producing gold since 2006. Ramelius owns and operates two production and processing hubs in Western Australia at Mt Magnet and Edna May. The company also mines and hauls ore from its ‘satellite’ operations at Penny, Marda & Symes Gold Mines, and is currently developing the Rebecca/Roe and Cue Gold Projects. When I first looked at the larger degree / longer term wave structure, the inverted head and shoulders patterned popped right out. RMS.AX had a really nice 5 wave Intermediate degree impulse from its November 2014 all time low. With price now making new all-time highs, the key question I have is whether we are seeing an extended Intermediate (B) wave with another move down to complete Primary 2 in what would be a flat or running flat. Or in the alternative, the completion of a Minor degree 3 inside a larger Intermediate (1) of a Primary wave 3 which will take many years to complete. In either case, price is moving higher within a bearish ending diagonal so RMS.AX is due for some type of correction. As for what degree correction, we will have to assess as the wave structure reveals itself in the coming year or two.

Gold Road Resources (GOR.AX)

GOR.AX is another Australian gold producer and was also included in Surf Report 9.4-4 when we reviewed its larger degree count. Recall from that report and as seen below in a zoomed in 4-hour chart, GOR.AX is completing the heart of an Intermediate wave (3) with Minor wave 5 currently filling out. Price broke out from Minuette degree Fib resistance which can now act as support. We should see a wave (iv) consolidation wave after (iii) completes.

Sandstorm Gold (SAND)

Sandstorm Gold is another brand new chart to both this series and this Substack as a whole. Sandstorm Gold was formerly Sandstorm Resources and is a Canadian company that provides funding to mining companies in exchange for royalties. These royalties are principally in the form of net smelter returns and streams with a focus on precious metals. SAND also spun off Sandstorm Metals & Energy Ltd. in 2010 as a separate TSX Venture Exchange-listed company to make volumetric production payment transactions in the base metal and fossil fuel sectors which it bought back in 2014. When I zoom all the way out to the 3-day chart to get a glimpse of Intermediate and Primary degrees, I can clearly make out a series of 3-wave diagonals in a potential 5-wave Primary structure. Price may have found an important low in Primary 2 in early 2024 but we ideally would like to see more of an aggressive move higher in a Minor A of (A). Remember that wave 3s are typically the longest and most powerful waves and if SAND truly is in a Primary wave 3 we should see it continue to trend higher in the coming years notwithstanding some viscous B-wave pullbacks from time to time.

Vault Minerals (VAU.AX)

Our last Australian gold miner covered in this report is VAU.AX which we previously reviewed the larger degree count for in Surf Report 9.4-4. Now we’ll zoom into the smaller degrees to see how that B-wave corrective structure is filling out. As we can see from the chart, VAU.AX is now getting that final 5th wave up to complete Minuette (c) of this Minor B wave. We then should expect a move down into the C wave but any impulsive move down would signal the start of C of Intermediate (2)

Calibre Mining Corp (CXB.TO)

Our final chart for this Surf Report is for Calibre Mining. Calibre is a Canadian-listed, mid-tier gold producer focused on the Americas with a pipeline of development and exploration opportunities across Newfoundland & Labrador in Canada, Nevada and Washington in the USA, and Nicaragua. On February 23, Equinox Gold announced an all-stock deal to acquire Calibre Mining, valued at $1.8 billion, creating Canada's second-largest gold producer. When the acquisition closes Calibre shares will delist from the exchanges and be removed from any funds such as GDX. Completing Elliott Wave analysis is moot but lets take one look at the larger degree picture of what might have been as well as what potentially is in store for Equinox Gold. CXB.TO is clearly in a bullish trend since the Intermediate wave (B) or (2) spike low occurred in October 2022. There was still some more upside necessary to consider what could be all of Intermediate wave (C) of Primary 1 complete. If this was following an Intermediate degree 5-wave structure then this next high could also potentially be just Intermediate (3). We will never know for sure because of the merger but it will be interesting to see what happens to Equinox.

Summary

After “paddling out” to see for ourselves how the Elliott Waves are taking shape in these gold producers, we observed that the majority of the holdings reviewed in this Surf Report including GDX remain bullish. A few charts such as SSRM and VAU.AX have some potential for additional corrections / downward moves, but please remember that we are now looking at holdings that are very small in GDX and rank above the top 30 in terms of position size. Every holding we reviewed in this report represent less than 0.6% of GDX’s weighted holdings. I will say that it is still a positive that the majority of these holdings are looking higher in the coming weeks and months.

In a 2017 interview with Surfer magazine, Nat Young also stated the following

“The great thing about surfing is, we are riding nature, and nature changes.”

I also think that statement can be applied to Elliott’s waves. Remember that the waves can change because the market shifts based on the aggregate sentiment of its participants. This behavior stems from investors natural tendency to herd into a particular stock or other financial asset. Elliott Wave analysis allows us get a glimpse into what’s changing in the sentiment of the market. So if you are riding a particular wave, know that it’s behavior can always change due to nature. Elliott Wave allows us to observe that natural sentiment we all are programmed to have and take advantage of it, rather than be a participant and repeatedly fall victim to our emotions of greed or fear. This is easier said than done of course!

I hope you enjoyed this Surf Report! In Surf Report 9.3-5 we will once again revisit the SIL ETF and cover the next batch of holdings there. Spring is coming and we still aren’t even close to being done with our Endless Summer in precious metals and miners. We’re going to take Nat’s advice and keep paddling out.

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 not listed here.

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