The 2011 peak in XGD is my Cycle degree top which ended not with a five-wave count but a “C” wave in Primary degree. That 2011 peak also matched the first peak in solar cycle 24 which is not some coincidental event as 1980 was the peak in solar cycle 21.
In late 2015 XGD started to bunch up and then exploded in a near vertical move after which XGD imploded again but has now had another bottom in 2018.
A couple of trend lines will give us an early possible target if this 5 wave run has any legs to it at all.
Either way, it’s impossible to pinpoint any exact top as we could get another huge double top pushing this wave count to the limit.
The question that every bullish investor eventually has to answer is if gold stocks are in a real bull market, and not just another bear market rally?
My “A” wave bottom in Primary degree gives readers a clue
I don’t have a good Gold/Xgd ratio started but I will try and do some more back checking at major turning points to get a few more max and minimum readings. We are at a Gold/Xgd ratio of 100:1 and we want to see that ratio compress as this bullish phase of the market progresses.
I”m sure all the GDX bulls are happy now that GDX is soaring again. This could be the start of a 5 wave sequence, with wave 1 in Minor degree already completed. This time I drew in some trend lines and if this 5 wave sequence is true then GDX should breakout to new highs.
Diagonal wave structures dominate so I have to look for connecting zigzags which isn’t always that easy to spot at times.
This bullish phase started in late 2015 and has now been running close to 3 years and 7 months. The fast bullish phase in 2016 is a typical “A” wave and the angle is the same as our present start of wave 3.
GDX is lagging behind gold as gold has already gone well above 2016 highs and GDX might still take a month before any breakout becomes more obvious.
This is also when any Gold/Gdx ratio starts to matter again as GDX rises the Gold/Gdx ratio starts to compress with our present ratio is sitting at 53.9. The expensive ratio to beat is 30:1 so we still have a long way to go before the ratio starts to set off alarms. Missing a bullish phase with GDX is not what I like to see happen but once this reaches its 5th wave high a new shorting position may present itself.
The $55 price level would present a nice target and by then investors will have to know if the entire rally is just another bear market rally.
From an Elliott Wave perspective, my “A” wave bottom in Primary degree is telling you what our present bullish phase is.
Just because some asset class goes up does not mean a bull market is in effect. There are many other gold-related ETF stocks out and there is no way I can maintain all their wave counts but I will start posting GDX more frequently. As of this posting, there are 45 different stock holdings inside the GDX basket so your betting market direction and don’t have to be a stock picker.
I may also look at XGD the CAD version as I want to avoid switching into US funds if I can.