GDX, Gold Stock Bear Trap Review

 

gdx-nov-20-2016

 

Last week gold stocks made another short blip to the downside what I hope will hold for the people that are priced addicts. Many of the disenchanted have been unloading their GDX holdings, but the smart money sees this as a screaming buy.  

Gold Mining Stocks Screaming Buy! Q3’16 Fundamentals  I have read Zeal’s work many times over the years and he makes some great charts. I also consider him a successful contrarian, and the last thing I ever what to do is show my readers an extremely bearish wave count, not confirming a contrarian point of view.  It is not just Zeal, that is bullish on gold stocks, but Steven Jon Kaplan is and has been bullish for some time. “Trump is about to make inflation great again.” –Luke Kawa and Sid Verma tells us that a big bull market in gold stocks should materialize.  When we produce a wave count that does not confirm the rich seasoned contrarians, then any bearish wave counts need to be thrown out instantly.

There are no stinking rich wave counters out today, but only the contrarians that never look at wave counts are millionaires or getting close to it.  Any wave count that is in sympathy with the crowd will fail, leaving those waves counting bears,  in the bull dust!  We need early warning which allows the contrarians enough time to build or accumulate large positions. Buying low also reduces downside risks, as this process brings down the cost average very quickly. 

Jumping on the gold bandwagon after it gets going again, will get the gold bull riders kicked off on the first correction, and we end up losing a bunch of money in a bull market.   

The Gold/Gdx ratio has been working down slowly but is still around the 57.5:1 ratio.  When it reaches 30:1 then gold stocks will be extremely expensive again, and chances are good it will be time to sell.