Advertise | Bookmark | Contact Us | E-Mail List |  | Update Page | UraniumSeek.com 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

The Power of Gold Diversification
By: Michael J. Kosares

The Dollar Works Just Fine
By: Keith Weiner

Gold: Is The Correction Over?
By: Stewart Thomson

SWOT Analysis: Palladium Is Now the Most Valuable Precious Metal
By: Frank Holmes

Arizona Legislator Proposes Securing State Reserves with Gold and Silver
By: Jp Cortez

A Weakening Global Expansion Amid Growing Risks. Will Gold Benefit?
By: Arkadiusz Sieron

This Is New: Governments Ramp Up Spending IN ANTICIPATION Of A Slowdown
By: John Rubino

THE SILVER PRICE and BROADER MARKETS: How Will They Trade This Week?
By: Steve St. Angelo

Gold’s Profound Breakdown. And Something Much More Important.
By: Przemyslaw Radomski, CFA

Gold May Return 25% In 2019 Given Brexit, Trump and Other Risks – IG TV Interview GoldCore
By: GoldCore

 
Search

GoldSeek Web

 
Gold Stocks are Not Close to Bottom


 -- Published: Friday, 2 November 2018 | Print  | Disqus 

By Jordan Roy-Byrne CMT, MFTA

 

It has been a rough year for gold stock investors.

 

Since Gold failed to break to the upside and the US Dollar bottomed, gold stocks have been in a strong downtrend. In September they hit two and a half year lows.

 

The oversold condition since then has been corrected but that rebound has been quite weak.

 

Evidence of that can be seen in the GDX advance decline (A/D) line (an important breadth indicator) which is showing a negative divergence and hit a new low on Wednesday.

 

Rebounds from major market lows are accompanied by strong participation. Note the strength in the A/D line during the rebounds which began especially in December 2015 and less so in December 2016.

 

Just a week after GDX retested major resistance at $21, its A/D line closed at a lower low.

 

 

http://www.goldseek.com/news/2018/11-2jb/11012018GDXad.png

 

The gold stocks enjoyed a strong Thursday but from a bird’s eye view, we should not get excited.

 

Given the weak nature of the rally and strong overhead resistance nearby, we should be on guard for the primary downtrend to reassert itself. Evidence of that taking place would be a break in the trendline connecting the September and October lows (in yellow).

 

http://www.goldseek.com/news/2018/11-2jb/11012018GDXGDXJ.png 

 

A continued decline into an epic bottom would not be atypical. In fact, one should recall how the gold stocks performed prior to the epic bottoms in Q4 of 2000 and 2008.

 

The rate of change for 6 months for the HUI Gold Bugs Index hit -50% in Q4 of 2000 and -70% in Q4 of 2008.

 

This does not mean that gold stocks have to crash into their bottom. More so, it reminds us it would not be abnormal if it were to happen.

 

On the fundamental side nothing has changed.

 

As we have noted several times in recent months, precious metals will not bottom until the Federal Reserve is done with its rate hikes.

 

Over the past 60 years, the majority of bottoms in gold stocks (but not all) have coincided with the end of Fed rate hike cycles.

 

When the economy and stock market weaken, the Fed will end its hikes and Gold will begin to outperform stocks. If the Fed shifts to rate cuts, then we’ll see miners making triple digit gains in a matter of months.

 

But for now investors and speculators alike should be very cautious and patient.

 

They should raise cash and if skilled enough use hedges when appropriate. That’s what we are doing. To prepare yourself for an epic buying opportunity in junior gold and silver stocks in 2019, consider learning more about our premium service.

 

 


| Digg This Article
 -- Published: Friday, 2 November 2018 | E-Mail  | Print  | Source: GoldSeek.com

comments powered by Disqus



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2019



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer


Map

The views contained here may not represent the views of GoldSeek.com, Gold Seek LLC, its affiliates or advertisers. GoldSeek.com, Gold Seek LLC makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, Gold Seek LLC, is strictly prohibited. In no event shall GoldSeek.com, Gold Seek LLC or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.