GDX, Gold Stock And Gold/Gdx Ratio Review.




Since mid August gold stocks have been crashing. At that time we hit a Gold/Gdx ratio of about 44:1 which was getting a bit on the expensive side when we use gold as money. This ratio has now changed to where gold stocks are becoming cheaper again when we compare it to gold. Today that ratio was a bit more than 50:1. At what ratio the gold investors start buying again is never a clear cut number, but 85:1 was a screaming buy in January 2016.   

We could still see fake rallies as this correction seems pretty simple at this time. That usally set off alarms as corrections that look too easy, are usally found by the lazy wave counters first.  We have many open gaps below present prices and one gap has been closed off already. At the $22 price level another 2 gaps will be closed off. GDX may never get that far, but the $22 price level offers a great bull market did to bounce from. We already have 2 smaller open gaps above our present prices so, I’m sure they will get closed off as well.   

The worst that can happen is if we run into a long drawn out triangle as that would indicate a degree change must happen. 

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