Junior Gold Miners ETF (GDXJ) is one of the few ETFs to recently top-out and reverse, causing many investors to worry. It was this time as the fund turned down on an incipient small breakout above that key $100 level. Traders believe that this price level is one of traders’ most favored psychological levels. Analysts are closely monitoring GDXJ’s movements, particularly in light of economic conditions influenced by the ongoing AI revolution and impending tariff hikes.
Market analyst Przemyslaw Radomski voiced his expectations for GDXJ’s upcoming troubles first last Friday in a big piece of market-moving news. He acknowledges that it’s a rough economic environment right now. New artificial intelligence innovations and escalating tariffs are adding insult to injury, crafting hurdles unlike what the market experienced in previous major disruptions. Radomski does note one important difference between previous periods of job losses and what we are experiencing right now. The job losses of 2008 were indeed fair-weather job losses, but the AI revolution combined with increasing tariffs may prove much more permanent job and market disrupters.
GDXJ’s Recent Performance
In the past few sessions, GDXJ could not keep the rise alive after a quick uptick that lifted it over the $100 level. This small breakout above the wedge (at least at first), which appeared to be a bullish signal, reversed almost immediately, invalidating bullish expectations for a big move up. Traders are currently on high alert, as a close underneath this $100 line in the sand would needlessly inflame bears with a feed-the-bear sell signal.
The $100 level is especially important to investors. It can act as a self-fulfilling psychological barrier that traders regularly watch. A fall below this level would signal more than just a worsening lack of faith in GDXJ, but imply more serious damage in the overall market. History shows us that past downturns in GDXJ’s metrics triggered huge sell-offs in 2020. This splinters investor coordination and has created a level of investor anxiety about going through that again.
Analysts, including Radomski, are not only concerned about immediate price movements but about the underlying economic factors that could influence GDXJ’s future performance. The effects of the AI revolution are clearly being felt as workers lose their jobs by the thousands in other industries. Who’s spending, and for how long? Even more ominously, this trend raises major concerns about whether or not consumer spending—and economic growth—is sustainable.
Economic Factors Influencing GDXJ
Yet these impacts of tariff increases are just beginning to wash over the market, warns Radomski. Without democratic controls, these tariffs can easily become political means of raising the cost of production. Costs producers must eventually pass on to consumers. As inflation increases and demand outstrips supply, purchasing power decreases. This is an especially dangerous combination that would likely continue to punish GDXJ’s performance even more.
The interaction of these dynamics leads to piercing questions about the robustness of GDXJ, other financial instruments contingent on owning underlying equity and other similar products. Investors should weigh the long-term impact of such developments versus short-term price action. Today’s economic environment is characterized by volatility, where core long-term investment approaches no longer produce desired outcomes.
Furthermore, as AI accelerates the disruption of traditional employment, the risk for permanent jobs lost rises. At the same time, we are in the midst of a technological revolution that is radically altering the labor market. Unlike other economic recessions, this time recovery might not happen. This possible change further complicates the effort to forecast GDXJ’s path.
Future Outlook for GDXJ
Przemyslaw Radomski, CFA GDXJ has the potential to reverse at any time. This underscores the imperative for investors to start recalibrating their portfolios today. He is particularly concerned that if GDXJ closes below the $100 level, then that will likely trigger remorseless major sell signals. That would lead to even steeper drops.
Radomski’s analyses are excellent reads right now for anyone looking to get a handle on GDXJ’s short-term performance. His reports are crystal clear, thorough analyses of where the market is today and where it might go in the future based on today’s conditions. He emphasizes that he and his associates do not guarantee the accuracy or thoroughness of the data presented regarding GDXJ.
Please be aware that employees and affiliates of Sunshine Profits may currently or previously have held long or short positions in GDXJ. Combining these roles can create serious conflicts of interest. Couple this with the fact that family members of these employees and affiliates may have engaged in trading GDXJ. Therefore, investors must be wary and do their due diligence when assessing investment opportunities in this space.