GDX, Gold Stock Crash Review

 

 

 

This time I included a bunch of pretty trend lines. Most of the time I just visualize the trend lines as I hate drawing them out.  Trend lines are so abused that I would rather not use them, but I find parallel lines far more useful than drawing out every little wedge.  I can count down 7 waves which can be part of a diagonal wave structure, or a correction.  We just had a gap open up, and my bet is that this gap above, will get filled sooner than later. There may be two more open gaps far above present prices, and gaps can act as a magnet for prices. 

The general public still sees no fear in the markets, as they are about as complacent as we can get. With all the potential turmoil around the world you would figure gold stocks should be soaring.  That will only happen when the USD takes a big rest, and starts to head south again. 

A fast drop like we witnessed usally happens closer to the ends of runs, so the contrarians are buying while the majority display, their emotional dumping of gold stocks.  Gold dropped much further than gold stocks, which is very normal. Don’t bet that gold stocks will catch up with gold itself,  as that was the Wall Street BS they tried to pass off on us, at the 2011 peaks. 

The majority will figure that the “Trump Bump” has destroyed gold stocks, but I believe the opposite will start to happen, surprising all those that are selling in a panic now.  The logic to dump gold stocks when they are just a bit off world record lows, makes no sense to any contrarian as I’m sure that the GTC Ladder Of Orders are kicking in buying gold stock related ETFs. 

If I show you a bearish wave count while the majority are also bearish then without a doubt I will be wrong and we would be forced to chase a trend again. 

The Gold/Gdx ratio has become cheaper again, which is a very good sign. At 59:1, from a bottom of 84:1 I consider gold stocks being rather cheap. 

Hits: 0

Share this...
Email this to someone
email
Print this page
Print