Auguraltrader

Gold Miners - the cards stacked up against, to fall...

Short
AMEX:GDX   VANECK VECTORS ETF TRUST GOLD MINERS ETF
It’s done.
With gold being on the retracement, and perhaps a large one at that, the gold miners ( ETF , GDX ) is under siege and under pressure to retrace hard.
Technically, despite a long tail, GDX clocked a lower low, which broke down of a support line briefly. The MACD is clearly broken down ahead of price.

So, what is the risk?

Plenty... the miners tend to do well under conditions where gold as a commodity is in a bull rally, borrowing rates are low, and particularly, that equities are rallying.

The S&P500 as well as major indices like the Nasdaq leading the downdraft of late, accentuating the risks to the Gold miners.

Given all the factors, it would appear an insurmountable effort for the miners to stage a huge rally out of the technical backdrop. Not that it’s impossible, but it has very low probability.

Comments

You were right on the money. Are we in a bear market now or consolidation phase ? Do you have a price target ?
Reply
Auguraltrader RealMoney617
Hi @RealMoney617
Thank you for your observation and vote of confidence.
I don’t think this is a Bear market for GDX. More like a major retracement.

Retracement price target is in this related idea posted on 21 Sep:


This idea here reveals more about Gold’s rather robust trend:
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I think the opposite. GDX has underperformed heavily against silver after outperforming it. It's time for a reversal higher. NEM PE ratio is below what it was in 2008 before the bull run.
Reply
Auguraltrader FreeCapitalist
@FreeCapitalist,

Indeed... In fact, going back in history, Gold (and GDX) rallies tend to come to an end when Silver outperforms.

This time, I agree with you that conditions are not only different from 2008, but are more conducive for multi-year upside. One thing for sure... more volatility, so more space for traders to move (and maybe more pain for investors to hold). Hence... robust up trend.
Reply
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