Comparing Gold to GDX
Doc joins me today to take a look at some of the longer term gold charts. We also compare the gains in gold to the gains in gold stocks – using GDX. What is interesting is that the stocks did not have the same sort of breakout as gold. GDX came close to breaking the 2016 high but it did not get there. Take note of the time frames Doc is working with.
The low this week for GDX:GLD happened at a steeply rising fork support:
https://stockcharts.com/h-sc/ui?s=GDX%3AGLD&p=W&yr=6&mn=11&dy=0&id=p91172407467&a=680387520
The strongest month of the year for Gold is September( Bill Meridean, cycles trader in Vienna Austria.)
SLV:GLD looks ready to launch its next move higher:
https://stockcharts.com/h-sc/ui?s=SLV%3AGLD&p=D&yr=1&mn=3&dy=0&id=p00192183868&a=673107997
Notice the fork resistance-turned-support that contained the correction twice.
In view of what Bob M is saying about a crash coming in September or October of this year, I don’t recall anyone here predicting the crash in 2008. There are a few gentlemen here, Doc, Matthew, Ex, and maybe a few others who read graphs and charts, to tell whether things are going to get better or worse. Opinions differ, and there never is a moment when financial opinions agree. Nonetheless; I don’t believe that charts can predict a sudden crash that appears out of the blue, when a Black Swan event happens. Given that there are quite a few Black Swans out there and the skies do not appear any too bright, I think a policy of being “ultra conservative” should be in the cards. DT
I wasn’t commenting publicly at the time but I did warn friends and family about the crash of 2008 and did so with good accuracy (which was probably luck). In fact, while flying into Jackson Hole on 9/11/08, I warned the stranger sitting next to me that things were about to get really ugly for stocks (she was already talking about the subject and said that her husband would not agree with me).
Anyway, you’re right that charts can’t conclusively predict a crash but they do tend to become “friendly” to one before one occurs and that has happened since I disagreed with Bob’s crash scenario. But I still don’t think a crash is in the cards — continued bearishness, probably, but a crash, not yet.
If I am wrong and there is a crash, I doubt VERY much that it will have the same impact on the miners as in 2008. The setup is not similar.
Doc can you give your estimate on possible low in gdx and gdxj on this possible pullback? Also lot of people looking for stock mkt to have a major pullback in sept/oct if so this could push gold and miners higher and gold pullback could be short lived, also how much can gold pullback if we will get sept and october rate cuts? Thanks
Matthew and Doc, we are all counting on your warning us before the next crash. Bob says it will come in October, 11 years after the last crash.
Bonzo B, I don’t see a crash happening but the stock market is unappealing here.
https://stockcharts.com/h-sc/ui?s=%24NYA&p=W&yr=5&mn=5&dy=0&id=p30634036794&a=506394219
Good analysis Matthew, it will be interesting to see if you are right about the miners. DT
Silver looks a lot better than gold now and that might be a very good sign just ahead of the symposium in Jackson this week.
https://stockcharts.com/h-sc/ui?s=SLV&p=W&yr=3&mn=7&dy=0&id=p18107425369&a=649322644
Doc if we do get a pullback in gold were to you see gdx and gdxj possible price level? Also with the talk of more rate cuts in Sept and Oct gold could reverse and run higher and push out the pullback in gold to end year or could this rate cut in Sept be sell the news and gold does correct in Sept. Thanks
A couple quotes when it comes to forecasting:
Forecasts create the mirage that the future is knowable.
– Peter Bernstein
Forecasts usually tell us more of the forecaster than of the future.
– Warren Buffett
I like old Bobby’s quote……….”nobody knows anything”….
Everyone, including those guys places, their bets based on some kind of assessment of the future.
Buffett also said that gold “doesn’t do anything but sit there and look at you.” A profoundly stupid (probably disingenuous) comment.
Investing is always a game of odds and risk management (such as position size, etc).
Buffett, needs to be on a chain gang …with Gates…… 🙂
It’s funny that gold quintupled versus Berkshire Hathaway between 2002 and 2011 but I don’t doubt that Buffett knew that such a performance was likely. Maybe I’m giving him too much credit.
It took 8 years but the tide has turned and gold is once again the one to own. That’s the future that the chart forecasts.
I would agree with that…….. 🙂
Milton Friedman said that “inflation is always and everywhere a monetary phenomenon” but he should have added that the same also goes for the price of gold. The average guy clearly does not know that.
GDX looks pretty great compared to gold/GLD:
https://stockcharts.com/h-sc/ui?s=GDX%3AGLD&p=D&yr=1&mn=1&dy=0&id=p66764932691&a=683474932