Ready For New Year 2017 Massive Rally In Precious Metals And Junior Miners

Summary

The Trump presidential election win has pushed capital into a major risk on rally, benefiting stocks, energy and the US dollar.

Interest rates are soaring in line with the Dow breaking 20k indicating major inflationary pressures.

Commodities such as industrial metals, copper and oil are rallying.

The junior gold miners could be on the verge of breaking a six-month downtrend.

A few weeks ago, in an article titled, "Is A Year-End Reversal Forming For The Junior Gold And Silver Miners?" I attached the following chart.

In the article, I wrote "The precious metals are very oversold and ripe for a reversal as they usually bottom at year-end then have massive rallies in the new year. This seasonal pattern has been strong even during this bear market."

Now two weeks later, it appears gold may have bounced off its support and is making some bullish reversals as shown on the charts. I am closely following to see if the junior miners can break the recent downtrend and regain the 200-day moving average in the new year confirming a new bull market rally.

This could set up for its next bull rally like it did in 2016. Despite this downward correction, the junior gold miners are outperforming stocks (NYSEARCA:SPY) and bonds (NYSEARCA:TLT) on the year.

The markets are pricing in inflation following the Trump presidential election win and that should benefit metals. U.S. stocks are soaring to record highs and the Dow is on the verge of breaking 20k, a major psychological level. Investors should be prepared for volatility as President Trump will counteract a lot of Obama's moves over the past eight years, which could accelerate moves in many markets.

Notice already that U.S. bonds are breaking down, as capital is flowing to riskier assets, most notably stocks, copper (NYSEARCA:JJC) and energy (NYSEARCA:XLE). To me, this signals inflation, rising interest rates, and major policy changes, which is already having dramatic effects on portfolios.

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Disclosure:  I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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