Tag Archives: Gold/GDX RATIO

GDX: It’s Now Or Never!

 

 

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.

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Quick GDX Update!

 

GDX hit a bottom at $17.28 and is now looking like it is correcting. If this big bullish phase is on, then GDX must head higher, leaving all previous resistance levels in the dust, or should I say, “gold dust”.

There may be a bottom in GDX today, but the rest of the day could still change things.  Above all, we must see bullish sequences with good corrections, as that is the sign of a bullish phase in effect.

The Gold/GDX Ratio is sitting at 64.25:1. This is cheap, but still far away from being extreme of 84:1.

As this GDX bullish phase advances, then this ratio will start to compress. Not until we get to a ridiculous expensive ratio, would GDX be overbought.

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GDX: A Bullish Phase In Progress?

 

 

GDX hasn’t moved that much, but last week many the COT reports I follow had some major shifts which is always a wake-up call that something has changed, That change should be to the bullish side. Even my PUT options watch list saw a major price drop, which would mean there is no longer time for the PUTs to recover and that they will all expire worthless. The addition of a CALL watch list, keeps you feedback in a real time basis, so I see a huge benefit of watching an “Options Pool”. With Options you can always calculate how much will cash will disappear, once the risk to zero is calculated the instant you buy any option.  Last week I reversed my entire account before I got up in the morning as I start late at night putting my orders in. I don’t run to my desk when I get up but coffee comes first!  Adding options to the mix is going to be the norm not the exception.

Many hate options, but there is a crowd that likes them, and I’m one of them. I think professional traders and hedge funds all use options regularly. If you hate options, because they may expire worthless, is more about how we use them. If readers want more options commentary in the mix then please e-mail me and let me know. Locally I look for traders I can meet face to face with. My buddy has taken a full course on options trading, so if I need any questions cleared up then I will will consult to him. After this bullish phase appears and then starts to stall at the $30 price level, we know we have a big H&S to contend with, but think of them now as friendly H&S patterns.

The Gold/GDX ratio has been hitting a price brick wall at over 66:1 which is not extreme, from a 84:1 major low. The same thing that happens on the upside also happens to the downside, when the ratios seem to slow down and then reverse. At least GDX now has the “C” wave second bottom which is very important for a corrective pattern to complete.

 

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GDX Potential Bear Trap Review

 

 

In the last few weeks, many of the COT reports I watch, have shifted very quickly ,in gold,  silver, Britsih Pound, US dollar, Canadian Dollar, and a few others as the hedgers or commercials pile on som long positions. XGD, the Canadian Gold stock index has a completely different pattern than most other related ETFs. I have closed off my GDX short positions this morning and have added a small 100 share long position as a test. There could be more downside to go, and I still have some PUTs and Calls out that can add a bit of extra insurance, in both directions.

It would be nice for GDX to stop before a new low gets hit, as these expanded type moves can do that.

I moved the “A” wave in Primary degree to the 2016 bottom, which is also a time leap of about 3 years. Just by changing “one” letter we “time travel” on paper 3 years into the future. The EWP is not about just flipping numbers and letters around like flipping hamburgers on a grill, but the entire wave counting world does exactly that.

The Gold/Gdx ratio is at a bit over 66:1 with about 84:1 being the extreme cheap side in my records. That 66:1 number should expand if GDX keeps dropping for the rest of Sept.

There could also be another mean spike to the downside, which is what usally happens just before it turns.

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GDX 2011-2018: 2018 Gold/Gdx Ratio Update!

 

 

When we are dazzled by the shine of the gold bull, we should be watching all gold shares and silver instead. The gold stocks will give us a bigger clue if we keep checking it up against gold. 30:1 was expensive with 84.67:1 being on the cheap side in late 2015. Today we are at a 63.7:1 Gold/GDX ratio, which is the cheapest GDX has been all year. This is a good thing but GDX, should still get much cheaper. I work about 20 ratios that I call my “Ratio Pool”, which are all in-house generated numbers.  My weekly Market Vane report is outside data, which reports only the percentage of bulls present. This still has some ways to go, as at 35%-40% bulls, still leaves to many bulls around. Low would be below 20% bulls or lower.

The hedge funds, non-commercials and speculators are all the same. The mass media thinks they are the smart money, which actually is the emotional dumb money. We can be gaurenteed that they will always get themselves in one trap or another, as they added more to their short positions in last weeks COT report. The bigger the hedge fund trap becomes, the bigger the ensuing rally will be, as they will be forced to close all their short positions, before they lose too much money. If we are lucky the commercials may even turn a bit net long in the process, which they have not done since the 1999 bottom.

The first leg down could still take all of 2018 to play out, but then it may also take all of 2019 for the counter rally to complete. This would make 2020 and 2021 two very bearish years, if we were to hit a major bottom by about 2021. Nobody is telling you that gold stocks and the general market could all end up getting closer together by the end of this year, as gold and the markets are at Cycle degree wave 3 peaks. This happened on a smaller scale with the 2008 crash, but now the entire world is sitting on some stage of a Death Cross!

Deflation is coming if we like it or not and the declining gold price is the biggest clue that deflation is on it’s way. Gold is already down over $700 since the 2011 mania peak. Every myth that gold investors have invented will not work, as gold will never protect you from deflation. The only way precious metals will protect you from impending inflation is when it is crushed in price, like what gold was in late 1999-2000. Gold assets do swing in both directions, but in the long run they will never hit zero like any crypto or paper based asset can. The gold market has about a 7.8 Trillion US dollar capital base, which is big enough for any trader to make a very good living with.

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GDX Bear Market 2011-2018 Review

 

The 2011 GDX top was a 30 year mania peak  that is far from over in its correction. It could take well into the fall before we would only be a third of the way through.

The entire zigzag in Primary degree may not finish until 2021 or so as this would be close to a Cycle degree 4th wave bottom. That would work out to a 10 year bear market which is a bit shorter than some that took 13 years to complete. This inflated world is going to crash and gold will follow it down as well, reflecting deflation perfectly. Gold will not protect you from inflation unless gold hits a rock bottom below $500. Extreme prices for everything servers no one, as it stiffles all activity over time. Inflation is no longer the threat as deflation will be the core reason why gold and gold stocks are still going to crash.

If your waiting for the US dollar to collapse then you could still be waiting when your 6 feet under. The USD could be on a Supercycle degree bull market that will last longer than our present lifetime or 2041 and beyond. The cause is the great worldwide fertility crash that will intensive after every stock market crash. This happened in 2010 as reports of a fertility crash surfaced.

The Gold/GDX ratio is sitting at 57.3:1 this morning, which is better, but still a far cry from being cheap at 84:1. I also keep an in-house “gold ratio pool” of about 15 items that only my clients get to see and ask questions on. The same thing goes for my “Wave Pool of 50 asset classes” which is all in-house maintained as well. Also a Death Cross Pool would keep track of any Death or Gold Crosses that might be forming. My buddy and I meet about once a month, and I assure you we are in full planning stages, to squeeze the most efficiency out of every major move, for the entire Cycle degree move. We can only squeeze in a few hours but it is the best way to help each other to be very clear in what we have to do, later this year and in late spring of 2019. My wave positions will be continuosly tested with real money from 2018 forward, and the next three years.

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GDX, Gold Stock, ETF Review

 

I will stay with my Intermediate degree wave count at this time. It will take some time to confirm this wave count, and in the longer run GDX should clear all previous peaks.  The $32 price level will be the main price level to retrace, but GDX should also push much higher than the 2016 highs. Between each gold ETF    there are differences, but in general we should have completed a Minor degree wave 2 bottom. 

My last Gold/Gdx ratio calculation on April, 22,  calculated at 54.34:1. Today it calculated at 53.85:1 which is a bit more expensive.  I see that there is still a long way to go,  before any real extreme becomes clear. In the future we could get a rapid completion of this ratio, which would then flash a warning sign. When we reach the 3d of a 3d wave count, then we are at the midpoint of this 5 wave move, after which only waves 3-4-5 in Minor degree need to be completed. 5th waves have a tendency to extend in commodities, but in no way does that mean it is a fundamentally stronger wave. 

All this could still take the rest of the year to play out, as we progress in the “C” wave bull market. 

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GDX, Gold Stock, ETF Review

 

 

GDX, which reflects the HUI pretty well, and  is trucking along,  maintaining higher lows, pretty consistently. In Dec 2016 GDX hit another bottom, after which it soared off in another leg.   There is a high probability that we are in a much bigger gold stock bull market, which may be a “D” wave bull market in Primary degree.  

Some may even try to get the entire structure into a wave 1-2 and not an “AB” like I have. This doesn’t compute as it would be a very tall wave one, which rarely happens. When they look long,  chances are good its an “A” wave  before any wave 1. An Intermediate degree zigzag would need a 5-3-5 type of a move, but we are a long way away from even getting close, as we need wave 3-4-5 still to complete in Minor degree.  Mind you the 5 waves up can be so choppy and erratic that every correction could seem like  the end of the bull market.

A bull market is very hard to kill, until it has played out all moves according to the script of an inverted zigzag.   Tracking the Gold/Gdx ratio helps to give us more of an objective view when these gold stocks are starting to get very expensive. At present we are sitting at about a 53.46:1 ratio, which is a bit more expensive, but nothing I would jump up and down about, or find alarming.  If we ever end up closer to 30:1 again, then we may have a different ball game and all other contrarian indicators would need to be reviewed as well.

We still have a long way to go as the next target is to breakout to all time new bull market highs, past the $32 price level.   

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GDX, Gold Stocks On Fire!

 

It looks like the rate increase sent gold and gold stocks soaring. This is a good sign if the gold stock continues to rally. In a bigger bullish phase GDX must clear, it’s 2016 top of $32, but how it gets there is the million dollar question.  At this time a zigzag wave one may be in the works, ending at the middle trend line at about the $29 price level. Of course, if a better impulse wave is alive and well, then the next top trend line, would  get sliced up with little effort. 

The Gold/Gdx ratio also shifted to the expensive side at 52.91:1. This is still very decent and definitely not in the nosebleed section. When we get closer to the extreme expensive ratio of 30:1 then we may need to be more cautious, but for now this bull market is still alive.  This gold market will always try and shake off all the freeloaders, that think they can ride an easy bull market. 

This afternoon, the US dollar crash sure helped in sending gold stocks up, so this also help my bearish case for the USD. 

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GDX Gold Stock, ETF Review

 

 

So far gold stocks have suffered the same fate as gold, as it seems we are in a mini crash at this point. More downside may still happen, but I sure do not want to see a complete retracement of the February bullish move. If it drops to a 60% retracement that would be just fine, as that would still produce a higher low which is the conventional description for a bull market.

If the wave 1 has already happened then we should get a far bigger move than what I have at present.  Even though both asset classes are crashing the Gold/Gdx ratio, which sits at 56:1 right now shows that gold stocks are getting cheaper when we use gold as money. I always use the futures gold cash price so I get more consistent readings. The gold price from the Kitco site will work just as well.  

A “D” wave bull market, could be real and even would match my old wave count.  Eventually GDX should breakout past all potential resistance wave structures, as that is what “C” wave bull markets are famous for. The majority will not clue in to a bigger bullish phase, until they are all bullish again. By the time that happens the gold stock bull market could be over. “C” wave peaks are also famous for creating blow-off spikes, which are usually produced by extension after extension. Mind you, many contrarian indicators also have to come in, as the Gold/gdx ratio is just one of them.

All the other gold stock related ETFs would also have to show us extreme readings. This is still far away so this mini crash should be just a correction.

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GDX ETF, Gold Stock Mini Crash Review

 

 

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. 

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GDX Gold Stock Bull Market Review

 

 

We can replace the HUI with GDX as a gold stock indicator, as GDX tracks the HUI very well. It is also easier to figure out the Gold/Gdx ratio.  Since early 2016 gold stocks have seen an explosive rally, but also got hammered in a summer type of a correction. This correction can contain an expanded pattern which, if it is true, then gold stocks should have no problem in breaking out to new bull market record highs. 

Depending on the speed this progresses, we should get close to the top trend line one more time.  This is still a substantial move. I visited my contrarian friend who manages some large accounts, and we both are in agreement that there is a lot more upside to go.  Not until we get some clear gold stock insider selling reports, and GDX becomes very expensive when we use the Gold/Gdx ratio, this bull market is not going to end anytime soon. 

The next phase is off to a good start, but is still hazy to the degree we are now in. This may not clear up until we see a sudden drop, otherwise gold stocks can just keep grinding along, as they have done already. 

There is no way I can be bearish with such a pattern even though the Gold/Gdx ratio got a bit more expensive recently.

Today this ratio is sitting at just under 50:1 from a maximum cheap ratio of 84:1. We would have to get close to 30:1 or more before gold stocks become very expensive again. This is not going to happen overnight so be prepared for a long ride mixed with some surprises along the way.  

As you can see my next target wave position at the next top is another “A” wave in Intermediate degree, so hopefully we can milk this run as much as possible.  

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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. 

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GDX, Gold Stock Bear Trap Review

 

gdx-nov-20-2016

 

Last week gold stocks made another short blip to the downside what I hope will hold for the people that are priced addicts. Many of the disenchanted have been unloading their GDX holdings, but the smart money sees this as a screaming buy.  

Gold Mining Stocks Screaming Buy! Q3’16 Fundamentals  I have read Zeal’s work many times over the years and he makes some great charts. I also consider him a successful contrarian, and the last thing I ever what to do is show my readers an extremely bearish wave count, not confirming a contrarian point of view.  It is not just Zeal, that is bullish on gold stocks, but Steven Jon Kaplan is and has been bullish for some time. “Trump is about to make inflation great again.” –Luke Kawa and Sid Verma tells us that a big bull market in gold stocks should materialize.  When we produce a wave count that does not confirm the rich seasoned contrarians, then any bearish wave counts need to be thrown out instantly.

There are no stinking rich wave counters out today, but only the contrarians that never look at wave counts are millionaires or getting close to it.  Any wave count that is in sympathy with the crowd will fail, leaving those waves counting bears,  in the bull dust!  We need early warning which allows the contrarians enough time to build or accumulate large positions. Buying low also reduces downside risks, as this process brings down the cost average very quickly. 

Jumping on the gold bandwagon after it gets going again, will get the gold bull riders kicked off on the first correction, and we end up losing a bunch of money in a bull market.   

The Gold/Gdx ratio has been working down slowly but is still around the 57.5:1 ratio.  When it reaches 30:1 then gold stocks will be extremely expensive again, and chances are good it will be time to sell. 

 

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Gold And GDX, Catching A Falling Knife!

 

gdx-nov-11-2016

 

It was a wild ride last week as this gold market dropped like a rock on Friday.  This violent move south of the GDX, sure looks like a nice spike to me. Of course, many people do not even see the spike, and when they do they think it is going to go much further.   It may sound crazy, but catching a falling knife is what we have to get very good at, to trade this market. The fear comes from not knowing how low it is still going to fall to.  You are not alone on that, as the majority think exactly like that.  GDX did fall to the bottom trend line and the 100 shares is just part  of a paper trade, to help test this  wave count.

If we look at this decline as a correction in a bigger bullish phase, then the decision may be easier. They key is to never take your entire position at once, as that is a basic buying rule that not too many people know how to do. 

The chances are good that the US dollar will resume with its bigger bearish run, and therefore GDX and gold will rise. We also have the classic setup, where the USD, and stocks are pointing up, as gold and gold stocks are pointing down.

 We just had another stock and USD bull attack, and the gold price suffered. This could all reverse and when it does, it will not just last a few days or so. It may last for the rest of the year or longer. 

In early 2016 GDX bottomed, and I show an ((A)) wave in Primary degree. This means we are in a ((B)) wave bull market in Primary degree, and still have a long way to go. 

GDX also hit the $21 price level, last week, which is what I like to see, as 21 is a Fibonacci number.

The Gold/Gdx ratio of 58:1, expanded the most of its entire bullish phase last week as well. 

gcy00-nov-11-2016

 

Looking at gold we can see how it went wild last week, but two obvious spikes have now developed. So far gold has come to a halt at $1220 and I’m hoping it will hold.  Again, that huge spike is another clear example of what they call a “Falling Knife”. These spikes on the daily charts, is what I target with any wave counts. At this point gold slumped about $155, which worked out to about a 48% correction.  Gold crashed below the middle of a previous bull market, so that helps with a potential price support as well. In a panic, it could still dip lower, but that is a risk that is always present.  

If all gold does is breakout to a new high, then you are looking at a minimum $155 price move.  On the real bright side, maybe gold can hit $1600, but we have to wait until the mass media headlines become bullish again.

Any “B” wave rally in a Primary degree is technically a big bear market rally, but it is so big that it will end up being just another bull market to the majority. By then they will all have forgotten about the 2016 bearish bottom, as they think the worst is over.  With any Elliott Wave we should never forget that bottom as it is the base to do all other net calculations from. The majority is hooked on their little slider retracement tool they use, but does a 48% retracement set off any alarm bells to buy? 

I’m looking for a “C” wave bull market in Minor degree, and don’t let the idea of a “Minor” degree move fool us, as a “C” wave move can surprise even the best of us. 

Silver has not completely retraced its decline, but it may turn into a double bottom. That also can give gold a little more room to move lower as well.

In bull markets all corrections point downward, usally finishing on some type of “C” wave, but when the bullish run does come to an end, all these “C” waves will start to invert on the smaller scale.

The US dollar is the key to all this and I will still post a daily USD chart today.  

 

 

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GDX, Gold Stock Potential Correction Review

 

gdx-nov-6-2016

 

Last month gold stocks started a run that has just started to correct a bit. Or is it going to move more than just a correction? Next week will be the big kicker for gold stocks, if this present rally is just another diagonal 4th wave rally.  Diagonal 4th wave counter rallies can come back up well into the price territory of wave two, but must “never” exceed it.  The 4th wave has just dipped into wave two last week, so it no longer works as an idealized impulse decline.

Some wave analysts may have switched over and started this bull market as a pure impulse wave, but I’m sure that in the long run, any impulse wave count will not work.  I recently posted an idealized or blueprint of a Primary degree “B” wave bull market, and it applies to all gold stock ETFs as well.

The Gold/Gdx ratio is just a bit over 52:1 which is up from the 84:1 extreme I measured at the bottom. It still is not on the extreme expensive side, but when the ratio expands, then this is a sign that gold stocks are getting cheaper when we use cash gold as money.

It would be fitting if GDX corrected back down to the $21 price level as that would make it a great Fibonacci price level. The GDX peak came in just below a Fibonacci $34, so a $21 price level would just about make it very close to a .618 (61%) correction. Since the EWP is a 60/40 type relationship, it makes no sense to use a bunch of other retracement levels that I have never found to work. 

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Gold, 2008-2016 Elliott Wave Count Review

 

GCY00-Sept-3-2016

 

The reason that gold has such a choppy wave pattern is because its bull market is a diagonal 5th wave in Intermediate degree which started back in April 2001, depending where we count from.  From the 2008 crash bottom, which is my Minor degree “B” wave, gold roared up in a wild ride to its 2011 peak of about $1920. This 2008 pattern can also fit into a triangle, which predicted another strong degree change as well. 

It wasn’t rocket science that gold was going to crash, but what was going to follow sure kept us guessing the majority of the time. Of course, this turned into a major gold bear market, as all rallies were completely retraced. I can turn the gold bear market into a triangle as well, just by increasing the degree level of the 2016 bull market, by one degree.  

I have repeated it many times that gold and gold stocks could be in a fake move as this gold and silver bullish phase started out very choppy.  Now that we have a peak that is 2 months old, we can draw the top trend line to help us to determine if the peak is real.  Of course, if gold is in a much bigger bull market, then that top line will get sliced, like a hot knife going through butter.

In the last 2 months any bullish support has not held, which is sending us a signal that gold and gold stocks, were in a bull trap at that June 2016 top.   If the top is in, along with gold stocks, then a complete retracement is the only option at this time. This may take much less time to confirm as all support price levels will not hold, no matter how much we wish for it to do so. 

I mentioned that George Soros had sold his shares of ABX, and now in hindsight, he may have been right on the money.  All very bullish wave forecasts were getting harder and harder to see, so when those options dwindle, then there should be a few more bearish options. 

The next few months will either make or break the bearish wave count.  I have no real news of any massive insider selling, as they all may be in a bull trap as well, besides, they are much richer than us and can handle any major decline.  

I’m tracking about six gold/gold stock related ratios, and I mentioned that gold stocks were getting a bit to the expensive side. The gold/gdx ratio, compressed to a bit under 43:1, with the max being around 29:1. Today we are sitting at about 48.44:1 as this ratio should keep on expanding for the rest of the year.

Next week I will keep exploring the bearish wave count, which should contain a zigzag. The zigzag will alternate and we should find out if gold goes below that $1303 price level.  Our next two price support levels would be around $1250, and then another about the $1205 price level.  After those two price levels we have nothing but open space, until we get down to that $1050 price level. 

Gold has no problem crashing $150-$200 when it wants to, so the next month or so gold should tell us on which side of the fence it was sitting on.

I could be wrong, but until we hit another bearish gold stock bottom, we have very little to rally from at this time. Fridays spike can also be a fake, and that should not take too long to confirm.   

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GDX, Gold Stock And Gold/Gdx Ratio Review.

 

GDX-Aug-30-2016

 

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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GDX, Bull Market Review

 

GDX-Aug-24-2016

 

Finally, gold stocks have started to correct, but how far down they can go cannot be accurately measured at this time. The bottom trend line may not hold, and if that ends up being the case, then my wave counts need to be adjusted.  There still is a good chance that this bull market could be a big “B” or even a “D” wave, but either way this bullish phase is far from finished. Yes, we hit a high gold/gdx ratio of about 44:1, but now that has improved with a gold/gdx ratio at about 47.73:1.

This is a good thing, as we were still far away from any extreme of 30:1.  I keep track of about 5 gold/stock ratios and when they all turn closer to the extreme side, then I would be inclined to look for the end of this bull market. Until such a time arrives, this bull market should continue, after good corrections have taken place. 

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Gold Intraday Crash Review

 

GCY00-Aug-24-2016

 

Early this morning gold has helped to confirm what looks like a bearish trend. Some may call this the start of a bear market, but I disagree.  Bear markets are just corrections, from older or bigger bull markets. In this case the bearish trend started in early July 2016, from about the $1375 price level. 

The bottom around July 20th fits into a bearish rally and gold should yet retrace that entire move, before we have a setup for another real bottom. This would finish a very ugly zigzag, and since the early August top,  we have been in a diagonal 5 wave decline. 

Gold stocks should also take a hit this morning, further making gold stocks cheaper when compared to gold. Gold/gdx is very close to 46:1.  In the bigger picture, and after this correction is finished, there still is a lot of upside room left, until such a time that gold stocks become very expensive when compared to gold.  This may take us until the gold/gdx ratio hits 30:1 again. 

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GDX, Gold Stock Review

 

GDX-Aug-12-2016

 

This gold stock bull market has run up dramatically with any big corrections. We have had some smaller ones which is good, but for the first 3 months there were virtually no corrections to even count out. These initial fast waves up, can be  “A” waves  or the “A” waves in a diagonal move.  For this bull market to keep going, GDX would have to touch the top trend line one more time.  This GDX gold stock bull market, is also riddled with gaps, which does not indicate any secular bull market lasting decades.

I also show a “Head” which would be the Head to a much bigger H&S pattern. So there are many things to watch, to give us an early warning if this gold stock bull market is getting ready to die. 

The most important indicator I have is the Gold/gdx ratio. I’m calculating this 2-3 times during the week, and today it is about 42.83:1 or just shy of 43:1 once we round it up. This is creeping up to the expensive side, for this gold stock ETF, but it may still have to go vertical, before this bull market will die. The gold/gdxj ratio is at about 26:1, which makes it on the expensive side as well. 

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Gold Intraday Review

 

GCY00-Aug-3-2016

 

Gold has made a bit of a correction this morning, or hope it’s just a correction until it gets proven otherwise.  Oil seemed to get a lift this morning, but gold heads south. So far it only looks like a correction as the spike down was fairly quick.  The worst at this time would be a bigger correction where gold just implodes to $1300 before it wakes up for another leg.  Any super leg past $1450 is going to get pretty tough to call if this choppy rally proves to be an early end to this so called gold bull market.  What if gold proves to be on a fake bull market? Nobody will believe you and they will call us crazy as, this has been declared a secular bull market. BS with the secular bull market in gold as, at best, we may eventually just finish an old bull market.   

“D” wave rallies are bull traps as the majority of the time we cannot tell the difference between a wave “1” and a “D” wave. They are both bullish moves, with the same bullish mood. The only way to tell the difference is some good wave analysis, but nobody owns the rights to good wave counting.  Did any wave counter get extremely bullish on gold in late 2015?  Had they even suspected that gold stocks could double or maybe even triple?

Missing a move where 100% or more is left on the table is not the wave count I would want to follow.  

One of the best ways to see if gold stocks get over bought or far too expensive, is to warm up the gold/gdx ratio.  Calculate it out on a regular basis and then know what the extremes have been, by back checking.  If very expensive gold stocks were at say 30:1 then our recent 44:1 does not make gold stocks all that cheap anymore.

The more this ratio compresses, the more expensive gold stocks become and then gold stocks would be doomed for an extreme correction, if not a downright failure of this gold bull market.   

We may have another month for this bullish phase to play out, but if we get into a setup when the stock market is pointing down and gold is pointing up, then this would be a classic stock mania bear trap. 

 

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GDX, Gold/GDX Ratio Bull Market Review

 

GDX-Aug-1-2016

 

GDX has been chugging along with a few more good corrections thrown in. Corrections happen when too many  non committed bandwagon riders jump on the bandwagon and then get thrown off as they hit a speed bump.   Emotional investors jump on (buy high) when they think that the bull market is safe in its trend.  Those who are just thinking of getting in have already left well over 240% gains on the table. 

We can be as bullish as a bull in a China Shop with this gold stock bull market, and I’m sure the contrarians just love it.  They may start to feel rich or richer with all the recent gains they have enjoyed.

I think we still have a month or so to go, but this bull market could top out as a “D” wave. “D” waves are phoney or false first waves as they can act and even look exactly like any 1 wave would of the same degree.  The general public does not know the difference as most of them are oblivious to pattern recognition. As long as something goes up, it’s a bull market in their eyes.  Again, there is still lots of upside room and GDX and gold may still have to go vertical before I can call that this bull market is dead.  

I’m starting to work the gold/gdx ratio again and today this ratio was sitting at 44:1. The most expensive ratio hit a bit over 29:1 and the  2016 gold/gdx ratio came in at about 84:1  The more GDX units you can buy with an ounce of gold the cheaper gold stocks are. At our present ratio of 44:1, it  would have to keep creeping down if gold stocks start to become more expensive when using gold as money. 

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