Finally gold stocks have made a move to the downside , which was a rather sharp move. For the next few months or longer, I will be looking at gold stocks from a “D” wave bull market perspective, as my original degree level may have been too low. Even now a wave 1 in Minor degree would be too soon, but this market can produce some serious extensions, so the Minute degree wave 1, may not last too long.
The longer this drags out, the higher GDX will go if project a couple of parallel trend lines. The mood for a “D” wave top will be about the same as any wave larger degree wave 1 would be. It would also show some very expensive Gold/Gdx ratios. Right now we are sitting at about 54.86:1 which is still rather cheap when compared to gold. If we get closer to a 30:1 ratio, then gold stocks would be approaching the expensive side. On most new record highs I will take ratio calculations if I remember. 🙂 For now I think we still have a long way to go, before the contrarian indicators I use, start showing themselves consistently.
Very seldom do I talk about the fundamentals, as from my perspective, they are irrelevant. Many traders used to call fundamentals as”funny-mentals”. Markets behave in the opposite direction of the herd, when the majority of bull riders think they have a free and easy ride.
At the extremes, fundamentals will always tell us the wrong things, as no popular expert was calling for a potential bull market back in late 2015. Yet the contrarians have been accumulating gold related assets for over a year already, well before the real bottom in late 2015.