The HUI turned out to be a popular gold stock related index while GDX is a good ETF to watch. They are both about the same but GDX is performing a bit better than the HUI.
Gold has already soared well above that 2016 high while the HUI has still been lagging far behind. Many of the gold-stock ETFs have been lagging far behind gold, so I’m sure there is some catching-up still to come.
Analysts have been looking for big break-out moves back in 2011 and they never materialized as well. Silver is in the same boat as the 2011 peak barely exceeded the 1980 peak by just a few dollars.
Don’t get me wrong as I’m bullish until all 5 waves in Minor degree show themselves. The lagging is just an early warning.
The Gold/Hui ratio sits at 6.9 this morning and that number should compress much more before this bullish phase comes to an end.
GDX is an ETF that we can trade so it makes sense not to spend too much of my time wave counting the HUI.
Give this until late this year to see if the next leg appears, but either way, I don’t want to turn bearish too early.
GDX tracks the HUI fairly well with plenty of volume and liquidity for any trader. I don’t have any positions in GDX but my funds are in 4 Canadian penny stocks that do have exposure to the gold sector.
Trend lines can be very subjective but right now the trend looks like it’s still heading up! I believe we need a 5 wave sequence in Minor degree with wave 3-4-5 still to develop.
Since the 2018 price low, we’ve been in a “C” wave bull market which if we are very lucky, might take us to the $55 price level again.
Last week, with gold making a bit of a jump, the Gold/GDX ratio expanded to 53.46 from 50.98 which means that GDX got a little cheaper last week. This bullish phase could last all year but the trick is to understand the 4th wave when it is unfolding.
GDX has been on a wild bullish ride that many gold investors have been hoping for. What is important is the 2015-2016 gold-stock bottom as the majority thinks we are in a huge bull market that still has a long way to run.
I think we are in a “C” wave bull market and it could be a complete set of 5 waves in Minor degree. It’s still a bear market rally from an Elliott Wave perspective and the entire time investors will get convinced to jump onto the gold stock bandwagon!
When wave 3 comes then all these “New Riders” will get thrown off when the 4th wave bearish phase becomes obvious. The 4th wave could also end up being a triangle which dictates the coming end of a this Minor degree run.
The Fibonacci $34, $55 price levels will supply resistance levels with $65 being a possible maximum.
The Gold/GDX ratio sits at 50.1 which should continue to compress as this bullish cycle keeps going. 50.1 is the most expensive ratio this year with 30:1 being the most extreme reading I have recorded.
GDX is in a bullish mood as solar cycle 24 is still crashing and the start of solar cycle 25 can cause all gold and gold stocks to reverse and crash. If this invisible 5 wave sequence comes true, then I think the impending bear market would be another 5 waves down in Intermediate degree.
I have a few penny stocks with exposure to gold and they have acted very bullishly, which also helps to confirm the bigger bullish trend!
The decline ended on September 2018 and GDX has been in a bullish phase since then. Higher lows on the charts are patterns of a bullish phase, with this wave 1 containing diagonal waves. Pretty trend lines will rarely work even if we are expecting a full set of 5 waves in Minor degree. Also, you can’t trust any angle that much and in this case the angle change dramatically as we started up wave 3 in Minor degree.
Even chart gaps have opened up below present prices but they can stay open for the entire bullish phase. Besides that, the big open gap at the $34 price level is a much more powerful draw.
With the fast move up in GDX it also changes the Gold/Gdx ratio which sits at 50.1 today. GDX is now more expensive than it has in the last 2 years. Any true bullish phase still to come, will push that ratio much further as 30:1 is my most expensive ratio to beat!
Jumping on a bullish bandwagon after it has already gone vertical or near-vertical only works if you have the bigger direction right. We can run into all sorts of wild corrective moves yet, but after each correction gold-stock, ETFs should push higher.
I can’t tell you when this GDX bullish phase will come to an end as extensions can push GDX beyond logic. Anywhere between $45 and $55 can be my price target after the impending 5 waves up have completed.
Once all the analysts turn bullish on gold stocks we know there is nobody left to jump on the bandwagon.
The HUI has pushed a bit higher but corrections can slow down any bullish phase. The important wave position happened in late 2015 and very little matters until the counter-rally to the “A” wave in Primary degree, is fulfilled. It took a while but in 2018 the HUI bottomed and looked back only once so far. More big corrections should happen once this anticipated 5 wave run is finished, which should be a wave 4.
Sure, many were bullish for the last 3 years and they will remain bullish even if the HUI hit 500 again. We are not in some super bull market that will send the HUI index to the moon, but more like a huge bear market rally. Very few analysts understand how big bear market rallies can be and it’s not the lame conventional move of 20% from the last bottom.
Would a HUI move from 211 to 500 be a true bull market or just a big bear market rally? We do have the conventional description of higher lows which is the sign of a bullish phase but any large degree Elliott Wave bear market rally will do the exact same thing.
There is nothing wrong with being long in an Elliott Wave bear market rally as they can produce massive “C” wave bullish phases, but also when the 5th wave is being played-out the decision to stay or get out will have to be made.
GDX will behave much like the HUI and the HUI is starting to get expensive to gold again. This morning the Gold/Hui ratio was 6.75 which is the most expensive calculation I have recorded since April 1, 2018.
I expect this ratio to become more extreme but not without any corrections.
This Barron’s mining index shows how choppy diagonal wave structures can get. I have to find a much larger historical chart as the 1940’s wave count is not clear enough.
I don’t believe we are anywhere near Supercycle or Grand Supercycle degree with this index but a Cycle degree wave 3 top for 2011 still fits very well.
The wave 4 bottom in 2008 overlapped my wave “1” in Intermediate degree which happens on a regular basis at all degree levels. BGMI does not get updated that much and I added it for a different perspective.
Gold stocks have been heading north and sooner or later BGMI will breakout above the 2016 high point.
Sooner or later gold-stock investors will have to ask the ugly question, “Are gold stocks in just another bear market rally?”. The HUI and GDX can fit into the BGMI wave count so we have to wait and see until all “5” waves in Minor degree have played out.
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.
I created this GLD chart late last night but is still good this morning. GLD follows the gold cash futures very well. One GLD bear market came to an end in late 2015 so that bottom wave count is important. Since the 2015 bottom, GLD has seen higher lows and has now charged to new 5 year highs.
In reality, the bullish phase has been going for 3 1/2 years already and against all odds is now pushing higher.
I moved my “A” wave back to the 2016 peak as a running flat plunged into the 2018 bottom.
Yes GLD is in a bit of correction but a 5 wave bull run has more room to move up as a wave 3-4 in Minor degree is still missing.
I refuse to post multiple alternate counts on one chart because sometimes we can have 5 alternate wave counts going at the same time.
The trick is to eliminate bad wave counts as soon as we think we’ve found them. There are always 3 simple choices of corrective waves and the choice all investors have to make is if GLD is in another big bear market rally.
There is open space ( little resistance) to the $150 price level but after that, the $170 price would provide stiff resistance.
Bear market rallies can be huge like crude oil has demonstrated. There are no daily trading limits in gold, so moves in both directions can swing dramatically.
In the last few years, I have been reading as much as I can about Vanadium and what it’s used for. I do not make calls on when and where one should invest as individuals all have different pain thresholds.
Vanadium is all about solar power storage with what they call “Vanadium Redox Batteries” that can store most of the solar power created during peak hours, and then smooth it out for use when the sun is not shinning.
There are many uses for Vanadium and they figure demand will double as battery storage is going to be the rage. I’m not a lithium fan at all and I have read that adding Vanadium to lithium batteries Supercharges the batteries.
There are no single Vanadium deposits in the world as Vanadium can be found with many other minerals. I own 3 Vanadium related companies which I will post one of them below.
This is not a buy recommendation but I like the crash from $19 down to 2 cents. I have about a 4 cent cost per share.
This is what SEK looks like in linear form. Most investors would never buy anything that low, but somebody is buying, as the volume has exploded in 2019.
After looking at the platinum chart I to adapt and adjust it for the GDX. This wave count makes the 2015-2016 bottom my Primary degree “A” wave. Moving the Primary degree back to 2015 is like time traveling into the future.
It’s a mental shift that has to be done every time we move a single wave position around which may not seem important to most, but the difference between Primary degree and Cycle degree could be 100 years difference.
The center line is where GDX bounced around the $21 price level. GDX at $21 found support and resistance about 12 times in the last 4 years and it still may dip below that in the next week or so.
The Gold/GDX ratio also spread a bit more and is now sitting at 61.33:1. This is not as cheap as I would like to see it, but we could be hitting a “Ratio Brick Wall”.
If this bullish scenario is even close then GDX should break well above the $30 price level and on a good day may even head to $34.
Short term for the rest of this month, anything can still happen, so we have to keep an eye on GDX. What we need is the spike to stretch a little longer, which might motivate me to take a long position in GDX.
Despite the many that are bullish on gold stocks like this HUI index, it has been acting very bearish. There are no fancy bullish wave counts here as I still see this decline having more legs to it. Since the 2011 peak the bearish line is much longer than any counter rally we’ve had. Who still has the power even today? Gold Bears who else? 🙂
The wedge should tell us more once the bottom bullish trend line gets broken. Late 2000 was also a major bottom but it was not a 4th wave bottom, so the HUI can stop well short of ever getting there. GDX is also acting like the HUI so the two of them could break to new 2015 record lows.
The Gold/Hui ratio is sitting at 8.11:1 today, with a cheap ratio being below 10:1.
In the end the only thing that matters is that the HUI crashes below 2016 lows and by then others will have joined the bearish party.
I believe that the decline of solar cycle 24 is drawing down gold stock prices as it did in late 2008, so hopefully solar cycle 25 will push gold stock prices back up! Just like a magnet the solar cycles can attract or repel gold prices and it seems to alternate very well.
1980 and 2011 gold prices repelled from solar cycle peaks. In late 2000 it was the opposite as the gold price was already crushed when solar cycle 23 peaked.
I do use trend lines but they can be so subjective that it can make them useless to use. I draw many different trendlines but I do not post most of them. In the case for GDX, we have a slightly down sloping trend while gold itself had more of an upward trend, since that June 2016 peak.
From the 2018 September bottom, the bullish move can fit well into a triangle, but it can also fit very well as a diagonal 5 wave sequence. Even W, X, Y, X, Z would work. In late February we had a peak after which GDX started a decline that can be part of another set of 5 waves in Minute degree.
Another 1-2 wave has to form after which we could see a huge spike to the downside develop. When that happens then a correction could be finishing and we should expect a huge counter-rally.
Gold has gone nowhere but down as the US dollar soared during the night. With the holidays and a full moon, it could give a small bullish price move, but otherwise, this GDX decline is far from over.
I do have a small GDX short position out which turned green a few days ago.
The Gold/GDX ratio is at 59.13:1 today which is only a bit cheaper than what it’s been most of this year. The more the Gold/GDX ratio spreads the better, as that would make gold stocks seem cheap again.
Stories that China, Russia, and a few other countries are buying gold sure does not confirm the bearish mood gold is in. They have to buy gold with US dollars as I’m pretty sure they are not going to use other currencies. They are trying to destroy the US dollar which has all been tired before in 2008!
Majority of the time we are confronted with multiple choices in any of the wave counts that we can produce, as all of it depends on where we are counting from.
In the case of GDX, I’m just going to talk about one move from September 2019 to February 2019. I labeled the same move as a Minor degree “A-B” sequence. A triangle in a “B” wave has a finality to it that forces me to look for and ending at least one degree higher, which would be Intermediate degree.
Just as easily as the wave count can fit a triangle, with just a few changes I can also use it as a diagonal set of 5 waves with an ABC1, ABC2, ABC3, ABC4, and ABC5 wave count. That would make GDX a bullish scenario where a correction would happen. The present “D” wave bottom would be the same as the previous 4th wave of one lesser degree, which would be around the $20 price range.
Of course, there is also the “W, X, Y, X, Z” label I can use which is just a glorified triangle. The most desperate wave count would be to try and force a pure impulse wave count on GDX. This would give as a potential of at least 4 different wave counts, with 2 of them being very bearish and the other 2 being very bullish.
I would love it if we had another bullish setup as I do trade GDX when I can. If a correction is due then I would like to see a huge spike to the downside which are a bit softer spikes than what we would get in Gold itself.
Many times GDX runs from month end to month end so maybe by the end of April, we will have a new picture.
The Gold/Gdx ratio is at 58.53:1 which is not all that cheap from an extreme of 84:1.
After a small bullish move, most analysts will give you a continuation of the trend usually when the trend can reverse and head south. It’s the top trend line that has to be broken by a wide margin and that has not happened yet.
Last week the HUI and gold stocks started to back off right at the trend line which keeps me looking for the bearish wave counts which may take the rest of the year to find out. Hui has been in a bullish phase since September 2018 and it would have to take a complete retracement taking out the 131 price level. I have a peak in February 2019 (180) as the secondary high is starting to look like a completed wave 2.
The Gold/Hui ratio isn’t all that bad at 7.6:1 but that doesn’t mean it can’t go back to a 10:1 ratio all the same.
I added the Barrons Gold Miner Index this time, as it has more history than most all gold related indices or ETFs out today. For a “Choppiest” pattern rating, I would give it an 8-9 rating out of 10. It wasn’t until I switched over to diagonal wave counting that this pattern made any sense at all.
All commodities have diagonal wave structures as their core pattern which has been going on since the Little Ice Age, which I use as my Submillennium Elliott Wave 2 bottom. Elliott wave counting is not what you think we are seeing but its all about how well we understand the idealized wave count that is most important. Looking for that perfect impulse like they show in the books is futile at best and you will never find them. There are two types of diagonal waves and I have posted both as examples.
There is a 30-year cycle to most commodities with a ± 1-year error rate that still boggles my mind. The long term CRB chart shows this very well with gold doing the same thing but following 5 waves in Cycle degree.
This GDX ETF started a bullish phase in 2018 and has carried through to the end of January, so far. If GDX still heads higher then my diagonal set of 5 waves down will get trashed. GDX just finished a small vertical spike but a small correction below $20 would turn GDX into a diagonal set of 5 waves up. These moves can always be a toss-up between a single zigzag and a potential set of 5 waves. If this so-called bull market is true then GDX must not dip below 2018 lows and must produce a good corrective move instead.
The Gold/GDX ratio this morning is standing at 58.86:1 which is just below my record of 57.3:1 in August of 2018. The cheap Gold/Gdx ratio was 84:1 which we may not run into until another major bearish phase materializes. Any move above the $25-$26 price range stops the wave count in its tracks and forces another review.
Reports on Fridays can send the markets on a wild reaction and I’m sure gold stock traders will not control their emotions when violent moves starts to come back. BTW, Monday, February, 4th will have a new moon which can be very bearish for stocks as well.
GDX is a gold stock related ETF, which has been in a bearish trend since about June/July 2016. The gold experts tell me I’m a dumb ass as they think gold prices are still going to the moon. They could all be right but gold stocks tell us a different story. Since the June 2016 top, GDX traveled sideways and down while at the same time gold was pointing up. Other gold stock related ETFs are much worse than GDX. Late summer 2018 is when our recent bull market started and GDX would have to play catch up to come close to what gold performed during the same time period.
Gold stocks have been lagging behind gold, which has been normal at most turnings. In order for GDX to continue its so-called bullish trend, then that top trend line “Must” get breached by a long shot. The GDX $26 price range would be the minimum that GDX would have to retrace back up to. If and when GDX moves below that 2016 low, then we know for sure that the entire move was just a big bear market rally.
Any gold stock move that is fear related or safe-haven related never lasts in the long run, because those are all emotional moves.
The Gold/GDX ratio is presently at 61:1, at 84:1 GDX would be pushing the extreme cheap side when compared to the price of gold.
Mark Hulbert also wrote a review showing how bullish gold stock investors have become.
This morning I still have a problem connecting with my futures site. The problem still exists and fixing it may take sometime. I will use more charts from Bigcharts.com as a temporary fix. I also have a serious issue inside my editor which slows down any posting I do. We also have severe wind conditions here today, where the lights start to flicker once in a while. When it rains it pours, as it seems issues come all at once.
Since the 2016 bottom, GLD was in an upward bullish trend before it turned and then plunged. Since about August 2018, GLD has been in slow and boring bullish phase. This 5 month run sure looks like a set of 5 waves, but we will not find out until an impending correction starts to really show. I can fit the entire move into a triangle which do not develop in any wave 1-2, but sure can happen in 4th waves. Diagonal waves act like triangles, so they can be confused with a wave 1. Any wave 2 correction can go very deep and the net move can retrace 60% or more.
Gold or GLD is the only asset class with this upward sloping trend as all other asset classes like gold stocks are not even close to following GLD. Silver is also a prime example of this.
The USD is far from a potential decline even though the commercial hedgers are net long. That might change by Fridays COT report.
As much as we would like to see some real action in gold stocks, the HUI has done nothing but slowly grind higher. I keep wave positions on about 13 gold stock related ETFs and indices and I can produce a different wave position for each one. The HUI bottomed in September of 2018 while I have some that just bottomed last month. There are no consistent bottoms where they all bottomed in September so rally may yet be a fake. I show what could be a wave count if any “A” wave was already completed in 2016.
This is still a bearish wave count I show but there could be only one more leg to the downside and then another fast move up. The trouble with that is if the HUI only went as high as I show, it’s not high enough to be followed by 5 waves down in Intermediate degree.
The wedge has the HUI price cornered into the cone which will force the HUI to show us it’s true colors. Gold itself has a different angle during the last 2-year bearish phase in gold stock related indices and ETFs.
The Gold/HUI ratio sits at 7.9:1 which is a cheap ratio compared to the 10:1 cheap ratio I have recorded. I would like to see the Gold/HUI ratio compress some more as it could hit 10:1 again.
I think the markets may be a bit slow during the holidays, extending the time it takes to play out into the first part of 2019.
For all the wild swings the markets have been making, gold stock related ETFs and indices have been acting like they don’t care. Nothing in the last month or so has fired up investors to hit the “BUY” button. What does it take? The wedge you see will certainly tell us, as the HUI has to “Breakout” or ” Meltdown”. There is no middle ground as the only other option is for gold stocks to keep going sideways. The Gold/HUI ratio was at 8.2:1 this morning which is getting cheap but not an extreme just yet.
RING is a gold stock ETF and it looks much like the HUI does. Gold itself is fooling us because the same pattern in gold is facing up! The same wedge applies to RING which is trapped in the “Cone” of the wedge. I have no large database of Gold/Ring ratios but this morning the Gold/Ring Ratio is at 80.9:1. HUI and RING look like twins, but other ETFs are much lower. Some Canadian ETFs have had new lows a week or so ago. RING had about a 49% drop from its peak, while the HUI had dropped about 52%.
I would love to go long but there are still too many bulls around for my liking. Next time I will post some of the worst gold stock ETFs that are near to hitting new all-time record lows.
Gold stocks made a recent high-speed drop that should be enough if the next bullish phase is supposed to be for real. GDX must not fall below the $17.28 price level as 100 % retracement is just another bear market rally. A bull market is supposed to give as higher and higher lows which have not happened in over 2 years. Every attempt to go higher has refused to materialize. Since the 2011 peak, all rallies were just mini bear market rallies as each rally has been completely retraced, except for the 2016 peak! The 2016 bottom created a bear trap producing that funny looking 5 wave sequence. The vast majority of these moves are just “A” waves, but in the case of GDX, it’s part of a potential “C” wave.
Gold charged up again today getting close to $1242, while GDX was not impressed that much by gold’s move up. All bear market rallies retrace themselves, so it’s just a matter of time before I throw my hands up and surrender to the gold bulls. Platinum has the exact same pattern as GDX and other ETFs, but there was no support for platinum as it established a new bear market low.
The Gold/Gdx ratio is not that extreme by any stretch of the imagination as 64:1 is not the 84:1 ratio when GDX hit rock bottom in late. I sure would like to see the Gold/Gdx ratio spread much further, indicating that it’s getting cheap again when compared to the gold cash price.
Hopefully, we will know more by the end of this month, as many turnings happen at month end, or the beginning of the month.
Gold Going To $3000!
GDX has been on a rally which many think was a major bottom as the above analyst thinks gold is going to $3000 soon. What these crazy forecasts are telling us is that the US dollar has to implode in a major way, before gold ever breaks out again. The 2011 peak was already a gold/silver mania peak which I documented very well. At that 2011 peak, the majority of analysts were all extremely bullish yet gold stocks imploded ignoring all the fundamentals. Most people couldn’t tell you what caused the decline after 2011, and I bet they still can’t tell you what lifted GDX in early 2016!
Sure GDX formed a bottom and it even has a decent “C” wave decline, but that doesn’t mean that GDX is in a real bull market! In a 4-year + decline, gold stocks had many rallies and they all resumed their larger bearish trends. It may take the rest of this month, but any new bottom will help make my bearish case. The US dollar is in a bull market that very few understand, as the US dollar bull market represents “deflation” not inflation. Any emotional gold buying moves will never last as they are not based on sentiment, but based on fear! Gold investors will run like chickens if this bottom does not hold.
The Gold/Gdx ratio is not all that bad at 66.54:1, but this ratio should expand much more before gold stocks become very cheap again.
This is just an index related to the gold mining industries. What was always odd was that this index never really created the “C” wave as deep as I would expect. Even a running pattern would have a longer “C” than what XGD shows. All the other ETFs sure don’t look like this, as they were all much, much lower. Back down in late 2013, news that insiders were buying was everywhere, that I was convinced that 2013 was a major bottom. What followed was a rally and then another 3 wave decline to a new record low, which I have as a “B” wave in Minor degree.
After the “B” wave bottom XGD soared and pushed up right into my wave 2 in Intermediate degree. This insane rally was a 4th wave rally, that pointed or confirmed my wave 2 top in 2012. Of course, that would break every impulse rule in the book, but it sure doesn’t break any diagonal rules that I know of.
One expanded pattern at the bottom gives us the big clue that this entire bullish phase is nothing but a big bear market rally! “ALL” bear market rallies completely retrace themselves back down to and below their point of origin. When it crosses to new lows, even just by pennies, then the bear market rally will get confirmed.
When we get close we, then we can see a huge H&S pattern being formed, and that would be extremely bullish from my perspective.
I have to do more back-checking to establish a few more Gold/XGD ratio extremes. Today the Gold/XGD ratio is sitting at 3.97:1, which means I need 3.97 gold ounces to buy one unit of the XGD index.
Don’t think that this is some freakish anomaly, because they do happen, especially in commodities.
GDX hit a bottom at $17.28 and is now looking like it is correcting. If this big bullish phase is on, then GDX must head higher, leaving all previous resistance levels in the dust, or should I say, “gold dust”.
There may be a bottom in GDX today, but the rest of the day could still change things. Above all, we must see bullish sequences with good corrections, as that is the sign of a bullish phase in effect.
The Gold/GDX Ratio is sitting at 64.25:1. This is cheap, but still far away from being extreme of 84:1.
As this GDX bullish phase advances, then this ratio will start to compress. Not until we get to a ridiculous expensive ratio, would GDX be overbought.
GDX hasn’t moved that much, but last week many the COT reports I follow had some major shifts which is always a wake-up call that something has changed, That change should be to the bullish side. Even my PUT options watch list saw a major price drop, which would mean there is no longer time for the PUTs to recover and that they will all expire worthless. The addition of a CALL watch list, keeps you feedback in a real time basis, so I see a huge benefit of watching an “Options Pool”. With Options you can always calculate how much will cash will disappear, once the risk to zero is calculated the instant you buy any option. Last week I reversed my entire account before I got up in the morning as I start late at night putting my orders in. I don’t run to my desk when I get up but coffee comes first! Adding options to the mix is going to be the norm not the exception.
Many hate options, but there is a crowd that likes them, and I’m one of them. I think professional traders and hedge funds all use options regularly. If you hate options, because they may expire worthless, is more about how we use them. If readers want more options commentary in the mix then please e-mail me and let me know. Locally I look for traders I can meet face to face with. My buddy has taken a full course on options trading, so if I need any questions cleared up then I will will consult to him. After this bullish phase appears and then starts to stall at the $30 price level, we know we have a big H&S to contend with, but think of them now as friendly H&S patterns.
The Gold/GDX ratio has been hitting a price brick wall at over 66:1 which is not extreme, from a 84:1 major low. The same thing that happens on the upside also happens to the downside, when the ratios seem to slow down and then reverse. At least GDX now has the “C” wave second bottom which is very important for a corrective pattern to complete.
The more I look at this Barrick chart the closer I think it’s at a bottom. I counted the entire 5 wave decline as a near perfect impulse decline while other were far from being nice impulse waves. Moving the big “A” wave to the 2016 bottom sends us on about a 3 year time jump back into history. Jumping back in time also allows us to look forward and find a new location.
Barrick and other gold stock EFTs could soar as another “C” wave bullish phase is near. I’m no longer and have reversed my positions last Thursday. I do not give any investment advice as if I did, I’m sure you would lose money at it if you jump in with an emotional “All IN”. I post this stock as I think the decline we have been having is part of a correction and there is a good chance ABX could add a nice set of 5 waves in Minor degree, which are the prized target wave runs everyone should experience once. I have no clue what the options chain looks like, but If I miss this up I will try not to miss the ABX decline when it happens.
Once this starts it should take very little to start seeing a bullish pattern to develop. ABX is one of the biggest miners in the world, which is in the GDX ETF as well. So if I have GDX long positions I already would own a small part ABX .
In the last few weeks, many of the COT reports I watch, have shifted very quickly ,in gold, silver, Britsih Pound, US dollar, Canadian Dollar, and a few others as the hedgers or commercials pile on som long positions. XGD, the Canadian Gold stock index has a completely different pattern than most other related ETFs. I have closed off my GDX short positions this morning and have added a small 100 share long position as a test. There could be more downside to go, and I still have some PUTs and Calls out that can add a bit of extra insurance, in both directions.
It would be nice for GDX to stop before a new low gets hit, as these expanded type moves can do that.
I moved the “A” wave in Primary degree to the 2016 bottom, which is also a time leap of about 3 years. Just by changing “one” letter we “time travel” on paper 3 years into the future. The EWP is not about just flipping numbers and letters around like flipping hamburgers on a grill, but the entire wave counting world does exactly that.
The Gold/Gdx ratio is at a bit over 66:1 with about 84:1 being the extreme cheap side in my records. That 66:1 number should expand if GDX keeps dropping for the rest of Sept.
There could also be another mean spike to the downside, which is what usally happens just before it turns.
I haven’t looked at this index much before, but it sure has some interesting features not present on all the other gold related ETFs and indices that I cover. One notable pattern is how high XGD soared compared to all others, and even hit the middle of my wave 1-2 counter rally. This is as far as I can push any 4th wave rally, which I have run into many times. Elliott wave rules from the book do not work in commodaties, as it is all about connecting zigzags at all the big degree levels as well.
When we look at the late 2013 and 2014 bottom wave, it contains a 3 wave decline, which I think is part of an expanded 4th wave. XGD should still crash well below the late 2016 bottom as any zigzag in progress is not finished just yet. We need the “C” wave to show itself, and travel to new record lows, to confirm that the 3 year+ bullish phase was just a fake.
Just in case XGD never completley retraces itself, then I already have an alternate ready to go. Once this wave position does fail I think the “A” wave in Primary degree will get moved to the 2013 bottom. 2013 was a very special year and it still is, as we also produced a double bottom in 2015.
I have no real track record on the Gold/XGD ratio but I started one, which worked out to 3.78. It takes 3.78 gold ounces to buy one unit of XGD. That number should get smaller as the cheaper it gets, we need less ounces to buy XGD units.
HEP is a Canadian ETF that says it is an income fund. I would have to do a lot more work to confirm that, as it doesn’t even have an options chain I can look at. It’s just one of those ETF’s that is only about $4 away from crashing through support. GOEX is another one. Not until all gold stock related ETFs have crashed to new lows that the majority might throw in the white towel!
Nobody has capitulated yet, which I think still needs to happen. It may take until early 2019 to bottom but then gold stocks could rally well into 2020. This run can move HEP up to the $65 range.
The Gold/Hep ratio sits at 63:1 and that should spread even further as this bearish phase continues. When this hits a real bottom, I may buy some token positions only, as I will work GDX and GDXJ the hardest.
The decline since the 2011 peak has been 5 diagonal waves, which I will not count over and over for readers entertainment. All my work only requires 3 lower degree levels, and Minor degree is my lowest. Minute degree wave counts are only good for day traders or for those that have no clue what the bigger trend actually is.
2011 was a gold/silver 30 year mania peak and it’s correction is far from over. By the end of this year we may be 1/3 of the way through it. Fast violent reversals will happen and if the planning is not fully underway now, you will not be prepared when the first “A” wave in Primary degree arrives.
I cannot stress it often enough, how important it is to “not” watch the gold price if you want to figure out where the gold price is going next! Silver and the gold stock ETFs is where the action is as they are the leaders. Silver only has less than 20 cents to make a complete reversal and soar, or it will be one of the first ETFs to cross to a new bear market record low. 2-3 other ETFs are catching up fast and we could end up with a small group creating new record lows. There is no way that silver can be in a bull market, and I think it is impossible for gold to remain high while silver crashes.
Once SLV just closes below $13 then that would confirm that silver was in a bear market rally. All the investors are getting fooled by an Intermediate degree bullish phase, so It will be pretty easy to fool the majority again, once SLV ends on a Primary degree “B” wave rally!
There is no bottom in sight just yet, as I look for bear traps to develop all the time. I have to see when the majority get into a bear trap, at the exact same time, that I catch my own bear trap! I can get out of any situation after about 15 minutes of work at night, and by the time I wake up all my orders have been executed.
Silver is far from a major bottom but look to the 2008 crash bottom as major support $8-$10. Silver has the same sideways pattern like gold, but this triangle is leaning over, which I call a running triangle. I never call them “truncations” as that would suggest an abnormal pattern. There is nothing abnormal about a running triangle.
When the headlines scream about silver not holding the $13 support price, chances are good that a trap is forming.