Healthy precious metals correction

Hey everybody,

This is your Resource Stock Digest editor Gerardo Del Real here with some Monday morning thoughts on what I’ll be keeping an eye on this week.

I'm currently watching the pullback in the precious metals space, which I believe is a very healthy one. Gold is down between 2% and 3% this morning at around US$2,350 per ounce. Silver is down even more, around 5%, to just above US$27 an ounce.

Yet, when you look at the kind of upward run we’ve recently had in the precious metals space, there’s no doubt we were due for a correction, which, again, I believe is healthy and reminds me of what we’ve been witnessing of late in the uranium space. 

Uranium’s run from US$70 to US$110 per pound was fast and furious. And, hence, the pullback to where we are currently, which is slightly above US$90 per pound, was welcomed and puts us in a position now where things can start to ratchet higher once again as the supply-demand fundamentals come back into play.  

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The bottom line is that — if gold can put in a new floor at around US$2,350 and silver at around US$27 — then what we’re looking at is a healthy pullback that bodes very well for what I believe is going to be a pretty historic run in the precious metals space as we head toward the second half of the year.

The same can be said for the uranium space. I think we’ve now seen a bottom in the uranium price from which to build off of. The uranium equities took a bit of a hit during the recent correction and now present a new buying opportunity for those who may have missed the earlier runup.  

One metal not presently in correction mode — at least not yet — is copper. The red metal has been rising steadily in recent trading and is now firmly above US$4.40 per pound. Keep in mind, folks, that things don’t go straight up… so we can expect some sort of correction here in the copper market soon. Yet, the overall outlook for the red metal is, indeed, decidedly bullish.  

If you do not have exposure to the copper space yet, you absolutely need to get positioned. I've done so in my personal portfolio. I've done so in the Junior Resource Monthly and Junior Resource Speculator portfolios. And I advise you all to do the same.

One more thing I'll be watching closely is the US dollar index, which is currently above 106 — the highest it’s been in a while. The fact that copper is hanging in there at current levels is a true testament to the strong supply-demand fundamentals for the metal. 

Coincidentally, I don’t view a higher dollar as being sustainable in the mid to long-term. However, in the short-term, with all of the geopolitical volatility and turbulence we’re bearing witness to, those inflows into the greenback will continue to keep that dollar index elevated. 

That's all I’ve got for you this week, folks. I hope everyone has a phenomenal week out there.

Let's get it!

Gerardo Del Real

Gerardo Del Real
Editor, Resource Stock Digest