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.