GOEX, Global X Gold Explorers (ETF) Review

 

goex-nov-13-2016

 

GOEX is another gold related asset that helps to confirm other wave counts as well.  By the looks of it, it’s heading south, and it may have some more downside left, but GOEX has reached the bottom of my two parallel lines, and I think it is getting close to rally again.

It all depends on our believe, if we think a return of the bear market is actually in progress. One way to tell, is to see how high the counter rally will go. Just by waiting to see if it breaks the top trend line, you would be leaving about a 24% gain on the table, for one specific trade. When we wait until a new upside breakout occurs, then you have left about a 63% gain on the table. Of course it only gets worse, if gold stocks are in a bigger bull market than what many realize.  

From the 2016 bottom, and about 7 months later a gain of about 300% was also left on the table. Don’t worry the contrarians have already scooped up those gains, leaving the late comers and trend chasers a few scraps of profit to make them feel good.  

This happens over and over, and the contrarians know this. The main reason they were buying low during the 2015 decline, is so they have the time to accumulate large positions. They do this with a specialized ladder of GTC  (Good Until Canceled) orders. 

This bullish phase could be a big ((B)) wave in Primary degree, and if that is true all corrections will produce “ABC” type crashes or declines.  It is when the rallies start to invert, that we will come to an end to this bullish phase. 

I calculated a few Gold/Goex ratios, and at present we are sitting at about 42:1. I don’t have a very good record, on the extremes, but I have a few that I can work with.

The 2011 peak extreme was a little less than 13:1 and the extreme low in 2016 was a bit over 73:1.  Our present, 42:1 ratio has to compress in the years ahead, which will start to make gold stocks expensive again. Markets move from one extreme, by loving gold stocks at the peaks, and then back to another opposite extreme, to hating gold stocks at major bottoms. So if you know nothing about the EWP, then the gold/stock ratio is one of the very best “Objective” indicators to use.      

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