-- Published: Friday, 20 December 2019 | Print | Disqus
Jordan Roy-Byrne CMT, MFTA
In recent weeks we’ve noted the positive developments in the gold stocks despite the sector being in a period of correction.
Last week we shared the idea that the next impulsive move in gold stocks might begin when the correction in the metals ends.
In this article, I’m going to share the one chart which I think will help us time that next move higher.
In recent years I have repeatedly noted the importance of the Gold against the S&P 500 ratio chart. It is going to be challenging to see Gold make a considerable move higher without it outperforming the stock market.
However, with the gold stocks now outperforming Gold and not too far from a massive breakout in 2020, the most important chart is the gold stocks against the stock market.
Specifically, let’s look at GDX against the S&P 500.
The gold stocks relative to the stock market put in what should become a historic double bottom in 2015 and 2018. These lows mark the points where gold stocks relative to the stock market were the cheapest in 90 years!
The gold stocks will be headed for that significant breakout when this ratio approaches that red resistance line and then rises above it.
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