ZJG Update: Bull Or Bear ?

The debate rages on as gold stock bullish investors are convinced that this sideways wedge is a bullish sign.  The initial start only took about 6 months, but this so called correction has taken about 22 months. I could see it if  these gold stock ETFs only took 8-10 months but 22 months is very suspicious.

ZJG has started to dip again and is getting very close to cutting the bottom wedge line. Investor will see thier accounts get shredded if they believe that they should be buying on the dips. The rich can play that game but a guy like me with a small trading account cannot ride a bearish trip down.

If this bull market is a 4th wave rally then chances are good a new record low will happen. This goes against many bullish scenerios but I refuse to pussy foot around in posting what I see.  This ETF is pointing sideways but other gold stock ETFs are pointing down so we have a real mixed bag with basically the same pattern in 1/2 dozen gold stock related ETFs.

Stocks, bonds and gold have been falling together and the mass media has been quick to point this out. It may take all summer and into the fall for this to become obvious, but it will also represent another great buying opportunity.

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ZJG Canadian Gold Stock, ETF Review

Many of the gold stocks related ETFs that I write about, do have slightly different wave patterns. Some of the odd patterns break all my bullish outlook, while others look much better.  Since the early August 2016, double top, gold stocks have been grinding out a correction, which may have completed with the December 2016 bottom.  It looks like a potential 1-2 wave count start, but then it starts to fall apart as we start up the anticipated wave 3.

When the start of wave 3 started acting, “funny”, I knew a diagonal wave count would make a better fit. It would still be part of a bigger “C” wave bull market. “C” waves can stay depressed for long periods of time, but then get up and go in a wild move that nobody was expecting.

The US dollar spent over two years around that $79 price level before it turned and soared in a massive move to the upside.

To help confirm that a bigger bullish phase is still alive, two peaks should get retraced. This would be wave 1 in Minute degree at $10.50 and then the big top of $12 should also get retraced.

Higher lows are still being played out so my bet is that gold stocks will see a new record high before it will ever see a new record low!

Any bullish opinion on my part should not be used as a “buy” signal or investment advice, besides investors with low 6 figure trading accounts, are much better served with a newsletter subscription from Steven Jon Kaplan, “The True Contrarian”.  

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ZJG, Gold Stock Review

This is a Canadian priced ETF that tracks the junior gold companies. Recently in May, we had another bottom, after which we see a small wave heading north. Some key wave counts were broken in the last little while, and what we have now is a potential, “ABC” zigzag crash in Minor degree. That would make a nice setting for a 5 wave run to play out.

There is a big difference in the physical size of these waves compared to the 5 waves that started back in early 2016. This would be alternating patterns between the A5 waves and the C5 waves in a zigzag.   We have very little downside room left before it breaks the “B” wave bottom in Intermediate degree.  If everything holds, then we are looking at a potential “C” wave bull market, which can be very dynamic. It can fool around and produce a short wave 3, but then add on an extended 5th wave.

Any “C” wave bull market is one of the best places to be, but these corrections can keep us fearful, thinking that it is going to plunge much further.  Too many people spend their time in trying to guess how far any asset class can still fall, instead of looking at it, on how high it can go. Yes, we have differences in pattern between all the gold stock ETFs, but none of them show signs of being extremely expensive when we use gold as money. 

ZJG opened a little gap as it started, so there could still be a bit of back filling. 

I think that ZJG can still double from this months low prices, but it sure will not happen overnight, as it may take the rest of the year to unfold.  I don’t have too many Gold/Zjg calculations, but we are sitting at 148:1, which is compressed a bit from 2017 readings.  

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ZJG, Canadian Gold Stock, ETF Review



I’m sure many gold stock bull riders are in some degree of panic right now, as gold stocks are crashing. Contrarians don’t panic, as they know catching what others throw away is just buying on the dips.  They always have some orders in at lower prices, with GTC orders. These orders can be done days ahead of time, so you never have to hang on the screen risking an emotional decision. 

Eventually this ETF should clear all 2016 highs. We are still in what I call a “C” wave bull market. These “C”waves can be relentless once a good one gets going. If short term trading is on your mind, then you never want to miss a “C” wave bull market.  

Due to the fear factor very few of the majority will buy into a falling knife, so most of us will miss these “C” waves when they do come.  I added to my positions in this ETF recently, and will hang in there until such a time when all the bulls are back!  If ZJG makes the $20 price level a year or so from now, that would be great.  At the same time, many of my indicators must be flashing their pretty red lights, especially when the ratios start to get out of wack. 

I still have to back check more with the Gold/Zjg ratio, but today we are sitting at 149.5:1. Just a quick check for a high extreme ratio reading, we are looking at about 56:1  All we need is two extreme Gold/ratio readings, but 4 extreme readings would be better. This is one of the few ETFs that I have to build a good ratio base from scratch. The problem is the ZJG does not have a long historic record.  

Many times when I explain ratios  they always want to try and forecast the price of gold. Doing it that way destroys the stability of the gold Troy ounce and you are no longer using gold as money.   Gold companies can come and disappear like Bre-X did in mid 1990s, but gold has survived for thousands of years, and still makes the best measuring tool today. 


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ZJG, BMO Junior Gold Index ETF (ETF) Review 2010-2017




Many of the charts I show will not show all the data, but I use many other gold stock indices where I can see and count the bigger picture. This a Canadian dollar based ETF so there are currency exchange differences always to consider. 

The bear market decline from late 2010 to early 2016, was the result of the stock mania which kicked off about 2011. In other words, it was the strong US dollar that killed the golden bull, which has now started to reverse since early 2016.  The fast move up is very typical of an “A” wave move, and they can be mistaken for a wave 1 as well. First waves are never the longest waves, so I’m sure that we are not going to get some super duper 5 wave sequence. At a minimum it would have to triple in physical length just to come close to looking like a great impulse.

The mid 2016 to late 2017 bearish phase can even fit into a triangle which can’t happen in a wave 2 decline. If the impulse is ruled out, then the only thing left is a huge bear market rally.  Since we already have a single zigzag decline, this means that these gold stocks could eventually break out to new record highs. (Complete retracement of the entire bear market)

The top horizontal line shows where an open gap is positioned, so this may become a turning point in the next year or so.

The faster this ETF will go the sooner the top line can get hit, but at this time it is impossible to judge if this speed can be maintained.  At a minimum, we could see these double from todays price levels, and if luck and the bullish mood (the force)  are with us, we could see much more.  

There will be no updates this Monday except maybe later in the day, otherwise I will resume posting on Tuesday. 

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