GOLD STOCK CHARTS
Every time gold stocks hiccup to the upside, there is a groundswell that emanates from the depths of disappointment and disillusionment. Promoters use words like exhaustion and capitulation to describe the conditions surrounding what they refer to as “a major turning point” for gold mining shares.
Let’s see what the charts look like. Below are four charts for GDX (VanEck Gold Miners ETF)…
Chart No. 1 – GDX Gold Miners ETF 1-Year
One year ago GDX was trading at approximately 31-32. It closed the year at 28 and change. Along the way it rose to a high of 41+ and recently traded as low as 21. Currently, GDX is up about thirty-three percent from that low point in late September but it is still down almost one-third from its 52-week high and down twelve percent for the past year.
It appears there might have been a line of support for GDX at 30 since all trading took place above that level prior to mid-June. After the 52 week high of 41.60 and subsequent break below 30, all trading has been below that price and currently it could be seen as a point of overhead resistance.
Chart No. 2 – GDX Gold Miners ETF 2-Year
Two years ago GDX was trading at 39. The possible line of support/resistance at 30 seen in the Chart No. 1 takes on more meaning when viewed on this particular chart since nearly all trading for the previous year (2021) was above that price level.
The breakdown from 2-year highs this past summer is seemingly more ominous in its implications.
Chart No. 3 – GDX Gold Miners ETF 10-Year
Ten years ago GDX was on its way down from a 2011 high of 65 when physical gold peaked at just under $1900 oz. Again, the significance of last summer’s break below 30 is heightened.
The current price of 28 for GDX is down almost forty percent from its price (46) ten years ago.
Chart No. 4 – GDX Gold Miners ETF (2007-22)
In looking at Chart No. 4 immediately above, any negative overall tone suggested in Chart Nos. 1-3 is amplified. At its current price level of just under 30, GDX is down fifty-seven percent from its 2011 high of 65.
SUMMARY
Rather than pre-launch mode, gold mining shares seem more likely to revisit the lows of 2015-16. That in itself is bad enough; but, when viewed within the context of a longer time frame, the news is hugely jaw-dropping…
- The lows for gold stocks in 2015-16 were identical to the ultimate lows reached in 2000 when gold reached its post-1980 low of $255 oz.
- The trading range for gold stocks over the past six years is similar to where they traded all throughout the 1980s.
Prepare for and expect unrealized expectations, more disappointment and lower prices for gold stocks. (also see Gold Stocks – Wishing, Hoping, And Losing)
Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED!