Contributed Commentaries
The chart everyone's talking about!
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
The current bull market in gold began in 2002. A correction set in nine years later, after gold had risen from $260 to $1915. The bull market resumed its upward trend in 2016. Confirmation of a gold bull market is when mining stocks outperform bullion. The charts in this essay are courtesy Stockcharts.com.
Featured is a chart that compares mining stocks (GDX) to gold bullion (GLD). The number 1 block shows a breakout where mining stocks began to outperform gold bullion. The breakout was confirmed by the 50 week moving average (blue line) which turned up for the first time in years. During the first half of 2016 both mining stocks and gold bullion rose sharply. The rally ended when gold bullion bumped up against $1350. This barrier held up all advances until June 2019. That barrier has now been left behind. It can no longer influence the ongoing bull market. Meanwhile the green block marked ‘2’ is telling us that a similar set-up is underway as the one we saw with block ‘1’. Price has broken out to the upside and not only is the 50 week moving average turning up, but so is the 200 week moving average (red line). To seasoned observers this is like someone is ‘ringing a bell’!
This brings us to the ‘chart that everyone is talking about’.
Featured is the weekly chart for GDX, the miners ETF. Price is carving out a bullish ‘cup with handle’ pattern. The supporting indicators are positive and the moving averages are carving out a ‘bull cross’. Price is just 2.5 points from breaking out at the blue arrow. The target for that breakout will be at 44! It may take a few weeks of oscillation, to fill up the handle in this formation, or the breakout could come quickly. The pattern is quite bullish, both for mining stocks and for gold bullion.
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