I discussed this a couple weeks ago, but it's time to revisit
this again with all the GDX and gold stock discussion today.
one thing I like to look at is how far an index is above or
below its 200 day MA, this allowed me to call for a top in gold
back in Aug when it got 28% away from it's 200 day Ma which matched
prior tops.
Here's a weekly chart of the HUI, I'm using the HUI because GDX
does not go back past 2006
HUI with the % way from the 200 day MA. I'm using a weekly
chart because the daily chart is too small to see back 10 years. On
a weekly chart, a 42 SMA is roughly equivalent to the 200 day
MA
As you can see, in 2004 and 2005, the HUI fell to 20 - 21% below
the 200 day MA. Currently the HUI is only about 18% below the
200 day MA, therefore it has room to go lower to match the 2004 -
2005 time frame if it wants to.
Of course in 2008 things went through the floor with the HUI
falling 60% below the 200 day MA, for now I'll consiser that an
anomaly and assume this correction would bottom near the 2004/2005
lows, we'll see...
Fundamentally of course PE ratios have come down a lot on
gold stocks and some are paying dividends now, historically
at least from a PE standpoint they are cheaper then they've been
for a while. I'm interesting to see what GDX and
the HUI do here.
as always, draw trendlines on the Ratio vs the GLD, it works
well, I've used that method since 2001.
If you conduct some chart research on the components of GDX, you
will find that there are three classes:
1. Some are in good shape, their prices are now far above their
lowest value. These include BSU, TRX, BVN, GOLD, EGO, AEM, AU and
AZK;
2. Some seem are bottomed out, these include AUY, ABX, GFI, HMY,
RGLD, ANV, SSRI, GBG, and VGZ.
3. Some are in struggling shape; they are only one inch above their
lowest value. These include GSS, KGC, NEM, NGD, IAG, PAAS,
CDE, and HL.
My point of view is if gold can go up from here, we may be double
bottomed out from here. However, if gold needs to visit $1500, then
we are still far from bottom.
why don't you dig into some of the fundamentals of the larger
cap ones. Current PE ratio isn't good enough because take GG
for example, they have been hurt recently by reduced gold reserves,
and hence future earnings will be reduced unless they can increase
production/reserves. I know the charts, I'll allow you guys
to dig into the companies and tell me which ones you like based on
fundamentals etc
also any juniors that anyone likes? I think we are going
to see more acquisition of junior stocks by large cap
gold stocks in order to increase their reserves
Currently USD breakout a four months triangle from down
side, and GOLD breakout four months triangle from up side. This is
very friendly to gold and gold stocks.
However, form yesterday, both USD and gold are testing these
breakout. If the test is successful we may get lower USD and higher
gold price. GDX may be bottomed out. Otherwise, GDX may go much
lower!
Posted by mdschapiro on 2nd of May 2012 at 03:46 pm
Another issue to consider with the gold miners is that the price
action since the top last year may indicate continuos liquidation
by the mutual funds that normally hold this stocks in anticipation
of a deflation event. Every gold bug is looking at the gold/hui
ration and is thinking the stocks will cach up without even
considering that the price of gold could come down and make the
ratio go up also. Since the first drop the bounces are getting
smaller and that may indicate that they are using the rallies to
sell and lately it seems they are in a hurry to sell. Technically
we are under the 38% retracement and it seems the 61% retracement
offers some significant support, while the neck of that huge top is
around $49 now and the longer we stay under it, the stronger the
resistance will be if we get there. All this just to keep all
options open.
Gold Stocks and % away from their 200 day MA
Posted by matt on 2nd of May 2012 at 03:28 pm
I discussed this a couple weeks ago, but it's time to revisit this again with all the GDX and gold stock discussion today.
one thing I like to look at is how far an index is above or below its 200 day MA, this allowed me to call for a top in gold back in Aug when it got 28% away from it's 200 day Ma which matched prior tops.
Here's a weekly chart of the HUI, I'm using the HUI because GDX does not go back past 2006
HUI with the % way from the 200 day MA. I'm using a weekly chart because the daily chart is too small to see back 10 years. On a weekly chart, a 42 SMA is roughly equivalent to the 200 day MA
As you can see, in 2004 and 2005, the HUI fell to 20 - 21% below the 200 day MA. Currently the HUI is only about 18% below the 200 day MA, therefore it has room to go lower to match the 2004 - 2005 time frame if it wants to.
Of course in 2008 things went through the floor with the HUI falling 60% below the 200 day MA, for now I'll consiser that an anomaly and assume this correction would bottom near the 2004/2005 lows, we'll see...
Fundamentally of course PE ratios have come down a lot on gold stocks and some are paying dividends now, historically at least from a PE standpoint they are cheaper then they've been for a while. I'm interesting to see what GDX and the HUI do here.
as always, draw trendlines on the Ratio vs the GLD, it works well, I've used that method since 2001.
If you conduct some chart
Posted by gyzhao on 2nd of May 2012 at 08:28 pm
If you conduct some chart research on the components of GDX, you will find that there are three classes:
1. Some are in good shape, their prices are now far above their lowest value. These include BSU, TRX, BVN, GOLD, EGO, AEM, AU and AZK;
2. Some seem are bottomed out, these include AUY, ABX, GFI, HMY, RGLD, ANV, SSRI, GBG, and VGZ.
3. Some are in struggling shape; they are only one inch above their lowest value. These include GSS, KGC, NEM, NGD, IAG, PAAS, CDE, and HL.
My point of view is if gold can go up from here, we may be double bottomed out from here. However, if gold needs to visit $1500, then we are still far from bottom.
Anybody has comments?
Grz
Posted by freddy123321 on 3rd of May 2012 at 06:56 am
Best performing I have seen. I think ELD Auq have some of the best growth
why don't you dig into
Posted by matt on 2nd of May 2012 at 11:43 pm
why don't you dig into some of the fundamentals of the larger cap ones. Current PE ratio isn't good enough because take GG for example, they have been hurt recently by reduced gold reserves, and hence future earnings will be reduced unless they can increase production/reserves. I know the charts, I'll allow you guys to dig into the companies and tell me which ones you like based on fundamentals etc
also any juniors that anyone likes? I think we are going to see more acquisition of junior stocks by large cap gold stocks in order to increase their reserves
The 60 minute charts of AU,
Posted by matt on 2nd of May 2012 at 11:23 pm
Currently USD breakout a four months
Posted by gyzhao on 2nd of May 2012 at 09:41 pm
Currently USD breakout a four months triangle from down side, and GOLD breakout four months triangle from up side. This is very friendly to gold and gold stocks.
However, form yesterday, both USD and gold are testing these breakout. If the test is successful we may get lower USD and higher gold price. GDX may be bottomed out. Otherwise, GDX may go much lower!
for now, GDXJ looks technically
Posted by matt on 2nd of May 2012 at 03:58 pm
for now, GDXJ looks technically stronger to me on a 60 min chart than GDX,
Another issue to consider with
Posted by mdschapiro on 2nd of May 2012 at 03:46 pm
Another issue to consider with the gold miners is that the price action since the top last year may indicate continuos liquidation by the mutual funds that normally hold this stocks in anticipation of a deflation event. Every gold bug is looking at the gold/hui ration and is thinking the stocks will cach up without even considering that the price of gold could come down and make the ratio go up also. Since the first drop the bounces are getting smaller and that may indicate that they are using the rallies to sell and lately it seems they are in a hurry to sell. Technically we are under the 38% retracement and it seems the 61% retracement offers some significant support, while the neck of that huge top is around $49 now and the longer we stay under it, the stronger the resistance will be if we get there. All this just to keep all options open.
If you have Tradestation, I
Posted by matt on 2nd of May 2012 at 03:38 pm
If you have Tradestation, I provided this % MA indicator for free, a couple weeks ago
http://breakpointtrades.com/blog/post/197737/