Surf Report 9.3-2: The "Endless Summer" in Precious Metals and Miners

Silver Producers, SIL Part 2

In Surf Report 9.3-1, when we first started reviewing the top holdings in the SIL ETF, I posted a link to the “Step Into Liquid” surfing documentary. I’m not sure if y’all got a chance to watch that yet. One of the more memorable scenes for me is the “Supertanker Surfers” segment.

I’m not sure if you caught that around the 52 min 44 sec mark in the documentary, but I found it to be very interesting. No, I haven’t made it down to Galveston, TX to catch some supertanker waves myself quite yet. That’s a bit of a drive from my home in north Texas but its definitely on my bucket list! Can ya’ll believe those dudes were catching supertanker waves?! And some waves would roll on for several miles! That’s a long wave!!

In Elliott Wave Theory, a well known assumption is that a Wave 3 in a 5-wave structure is the longest wave in the general prevailing trend. However that is not entirely true. Wave 3 doesn’t have to be the longest wave. It just can’t be the shortest wave. Many times, especially in some commodities, Wave 5 can last longer. But Wave 1 can also be longer than Wave 3 at times. During gold’s 2000-2012 rally, Intermediate Wave (1) was actually the longest wave. But Wave (3) was still longer than (5) as shown.

Remember Wave (3) just can’t be the shortest in duration. So the next time you ask yourself what the longest wave should be, don’t assume it will always be wave 3. I think we all can learn from those supertanker surfers; if we find a good wave to catch, why not ride it because it might last longer than we think and we could be missing out on what could be fun ride!

So now lets continue with the next batch of holdings in the Global X Silver Miners ETF (SIL).

Industrias Peñoles S.A.B De CV (PE&OLES.MX)

We last looked at Peñoles in Surf Report 9.4-1 for an updated larger degree view. Just as we’ve now done with many other miners, let’s zoom into the smaller more immediate timeframe to see what may be happening within the smaller degree waves. So far the price structure from the Intermediate wave (2) low which was struck back in August of 2022 has been quite overlapping and has all the characteristics of an ABC diagonal. I’m looking for a 5 wave rally through Fib resistance to complete Minuette wave (c) of Minute iii. We can also see there is pretty good confluence of Fib extension targets in these two degrees for Wave iii of Minor 1.

Fortuna Mining Group (FSM)

We last looked at FSM in Surf Report 3. Since that report which was published in January 2023, I have not changed my view that a larger degree 1-2 setup is showing us a potential for much higher FSM share prices longer term. I have only updated my degree notations for that 1-2 and we are now seeing the price structure fill out within a Primary wave 3. Price is currently pulling back in what I believe is a wave 4 of an Intermediate (1) within that Primary wave 3. We would very much like to see Fib support hold here with a 5th wave up to complete an Intermediate (1) impulse. Remember the wave duration rules. I’m showing a wave 1 longer than 3. That means wave 5 is going to be quicker than 3 if this count is going to be valid. Otherwise this count will need some rework.

Fresnillo (FRES.L)

Along with FSM, we also looked at the big picture in Fresnillo in Surf Report 3. While the Primary degree could still be a 1-2, I wanted to show you another potential that this larger degree structure could fill out as a 3 wave diagonal. I also think this path is more reasonable because in Surf Report 3 we were questioning the Fib extensions that would be needed in the Intermediate wave degree. We would now like to see price break that downtrend line which started in August 2016 and begin making higher highs and higher lows from the March 2024 lows. There are only 3 waves up from those lows which adds to the probability that we’re likely dealing with a diagonal. Watch out for those b waves if this becomes the prevailing wave structure.

SilverCrest Metals (SILV)

Since we did a larger degree count update in Surf Report 9.5-1 for SILV, let’s now zoom into 144-min chart to get a better understanding of the waves at smaller degrees. I think we are seeing a nice Minuette (i)-(ii) setup inside a final 5th wave up in Intermediate wave (1) which will carry SILV into the double digits. These are some Elliott waves that I’m personally surfing and built a fairly sizeable position under $5/share in late 2023 based on the bottoming structure in Primary B or 2 and favorable risk/reward. I will also be taking some profits up there in the wave extension target box for Intermediate (1) with the intent to buy back some of position once the larger degree Intermediate (2) completes. Even though I haven’t had a chance ride supertanker waves, I was able to catch a very nice Intermediate (1) which has lasted the better part of a year.

MAG Silver Corp (MAG)

MAG Silver was also reviewed in Surf Report 3. I have changed my count on this one as well given all the overlapping waves and deep retracements. I now think we’re likely seeing a larger Primary degree ABC diagonal with a violent Intermediate Wave C in a Primary C at our doorstep. Price found a bottom in February 2024 and has broken out from the bullish ending diagonal. MAG has a lot of catching up to to do here so we’ll have to keep an eye on it and see if it can finish a full five waves up in Minor degree Wave 1.

Aya Silver and Gold (AYA.TO)

Its been just under a month when we did an update on the larger degree count for AYA in Surf Report 9.5-1. Zooming into the 144-minute chart I still think we can see a bit more consolidation in Minor degree wave 4 before we see what will be the final wave up inside Primary 3. I’m keeping a price target box fairly large for now as we could easily overextensions in Minor degree 5 given the Intermediate structure. Recall that Intermediate (3) topped a price level higher than the 1.786 extension off the Primary 1-2 extension. That implies much higher Fib extensions can be seen for Intermediate (5). Once we see wave 5 begin, we will be really looking closely for a complete wave structure in Minor 5 to mark the completion of Intermediate (5) and Primary Wave 3.

SSR Mining (SSRM)

The last time we looked at SSRM was all the way back in Surf Report 2 published December 2022. A lot has changed in the big picture for SSRM. In Surf Report 2 we were looking for a potential Primary 1-2, Intermediate (1)-(2) setup. However we had assumed Intermediate (1) was completed as a 3 wave diagonal and we all know that diagonals are not very reliable. The setup broke violently when it was reported that a landslide occurred at its mining operation in the Erzincan province of eastern Turkey leaving at least nine miners missing. SSR Mining suspended production sending shares on their own 50% landslide plunge. Very unfortunate for those miners and their families. Its also not good for the Elliott Wave structure as there is now a bit more work to do to complete a full Intermediate (C) wave down. After Minor wave 3 down completes we should expect a wave 4 bounce to occur before one final wave 5 would complete the full downside structure. Only then should we begin to expect a fuller recovery in the much longer term. What a disaster in every aspect with lives lost being the worst part. Mining is dangerous and hard. There is a reason we call them precious metals.

Endeavour Silver (EXK)

Our last updated chart for this Surf Report is a big picture update for EXK which we haven’t looked at since Surf Report 3. In that report we were looking for a potential bottom for Intermediate (2) during the lows of September 2022. However, the waves did not confirm that low and the rally thereafter only made 3 waves up in corrective fashion. Price then plunged down hard breaking support and did not find a bottom until February 2024. You may recall that EXK is a core position of mine, and I am looking for some excellent Elliott waves to surf during the upcoming #silversqueeze. Did I sell my core EXK position? Absolutely not. Did I add a lot more shares as it headed down to the Intermediate depths? Absolutely!! I filled up my wife’s long term account with many shares under $2. This time we can count a full 5 waves up and the only question I have now is whether we’ve seen all of Minor degree wave 2 complete, or if EXK is already starting Minor degree wave 3 of Intermediate (3) (or possibly an Intermediate (C) if this is filling out as a diagonal). We'll need to be patient and wait to see if we can get a 5 wave impulse within the much larger Primary degree count but regardless the surf is now finally looking UP in EXK! 🏄

Summary

With the exception of SSRM, things continue to be looking constructive for these silver miners in the longer term. As we saw the charts above, some miners look ready to make an imminent move higher while some may consolidate a bit more in the shorter term. Always remember that in Elliott Wave we need to look at each chart on its own. Not every miner will be in a wave 3 when silver begins it next leg higher. Some will be finishing up Minor degree wave 5s such as AYA, FSM, and SILV, while others such as EXK may be moving into a wave 3. I also hope you’ll remember that waves 3s don’t always need to be the longest wave in a 5 wave structure. They just can’t be the shortest.

I hope you enjoyed this Surf Report and found it informative. I’m off on vacation this next week and should have a new report out a couple weeks from now where we’ll cover another group of holdings within the GDXJ ETF.

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!

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 EXK and SILV which were analyzed here.