Even though mining stocks closed last week below the Jan. 2 close and silver even declined below the Dec 31, 2017 close, gold moved higher. It's not far from this year's top either. So, is all well and are bullish gold price forecasts justified? Not necessarily. In today's article, we show you two reasons why it's a good idea to think twice before opening long positions in gold.

Some time ago we discussed the apex technique for the HUI Index and it worked perfectly, triggering a reversal right at the apex of the triangle. Today, we can see something very similar on the long-term GDX ETF chart and in light of the mentioned performance, it shouldn't be ignored. Let's take a look at the details (charts courtesy of http://stockcharts.com).

If you're not familiar with the apex reversal technique, here's a quick intro. Whenever we have a visible triangle pattern, the moment when the lines creating the triangle cross marks the likely time target for a turnaround. This is a method for detecting reversals, but it doesn't say anything about the price, at which the reversal is likely. This technique doesn't work for all markets, but – fortunately for us – it's quite efficient in the case of the precious metals market.

The triangle pattern is clearly visible as it's based on the very important 2016 and 2017 price extremes. We created two triangles, one based on the closing prices and the other based on the intraday extremes. Based on the former, the reversal was likely to be seen last week or the week prior to it, and based on the latter, the reversal was likely to be seen last week or this week. The common denominator is the last week, and – unsurprisingly – mining stocks reversed precisely at the moment.

The implications of the turnaround in mining stocks is clearly bearish as the preceding move was up.

What about the gold price itself?