Gary Tanashian | Aug 18, 2023 15:15
The gold stock correction has been in play since GDX/HUI doubled topped in April-Mayh2 Gold Stock Correction From a Seasonal View/h2
We begin this article, which updates the gold stock correction. Below are the recent seasonal tendencies for GDX. I’ve elected to use only the years from 2018 to current to keep the graph clean and to show that 2023 is shaping up per the norm in the post-pandemic era.
As for the other subscriber request, a GDX/GLD ratio chart going back to 2001, I’ve used the HUI/Gold ratio (HGR), which, unlike GDX/GLD, goes back that far. I’ve also added an important macro consideration to the chart, the 30-year Treasury bond yield, AKA my trusty ‘Continuum’ view of the macro. This is not a be-all, end-all indicator, but it sure is a big one. Here are my thoughts on it as it relates to the HUI/Gold ratio.
* Proper gold mining fundamentals do not include cyclical inflation. Usually, it’s quite the contrary.
h2 Gold Stock Correction, Daily Chart Technical View/h2As for GDX, let’s look at the daily chart used in reports and updates to guide the process of rallies and corrections since Q4, 2022. With all of that history, the chart is getting a little busy, but then again, it’s got a lot to say.
Let’s put aside much of the chart’s previous history and take the situation from the secondary (double) top in May. Our weekly updates on the status have allowed us (subscribers and myself) the opportunity to be fully prepared for what is unfolding now.
Anecdotally I see would-be contrarians stepping up to buy gold stocks. Being brave when others are fearful. That is fine, but some of the suspects I see talking (writing, tweeting, etc.) are people I’ve noticed to be usually/always bullish contrary indicators in the past. Combining this with the tendency for gold stock corrections to end with much drama, I would not be so sure that the support associated with that March low will hold.
But it’s up to the market, not me. I am just a guy holding a few preferred gold stocks with a hedge in place. Give me a hold of the March low or give me, not death, as it may feel like for those fully positioned, but give me that lower gap fill. If the gold stock correction halts at/above the March low, I’ll release the hedge. If not, I’ll try to hold it into a dramatic low while likely adding to preferred positions and adding a couple of others I have a greedy eye on.
None of this will be useful for more than a trade if the macro fundamentals do not improve. But I expect those fundamentals, battered but not beaten over the last few months, to do exactly that.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.