Gold Miners: At Least We Know Where the Goalposts Are

Headed into the closing bell of a mixed Monday session, the Nasdaq still seems at risk of seeing some selling accelerate lower. On the other side of the tape we have strength in energy and some miners, especially the precious ones today. 

After an extremely dodgy middle and back-end to the summer, it is understandable to be skeptical of gold, silver, and the miners housed in the GDX, GDXJ, and SIL SILJ ETFs.

However, some prominent individual names like KL are having great days. And the good news is we have some defined goalposts going forward to see if this move has any sort of viability. Specifically, on the GDX ETF (for mostly mid-larger cap gold miners) daily chart, below, the arrow points to the midpoint of a well-defined falling channel pattern. 

Friday's low on GDX was $31.50. And I would absolutely trade against that level to see if this move has legs. A move up and out of the channel after holding the midpoint today should be rather bullish, especially headed into the FOMC in the middle of next week.

There are plenty of intelligent, experienced market players and pundits on opposing sides of the gold and miner trade here, with some arguing it is only a matter of time before they explode, while others argue they simply cannot do well in this version of inflation. 

As usual, in a high stakes showdown in markets there will be a faction of smart people who get it wrong. But at least now we know where the goalposts are.