GOLD MINERS FINALLY BREAK OUT TO THE UPSIDE -- GOLD MINERS ARE STARTING TO DO BETTER THAN GOLD -- AND THE STOCK MARKET
GOLD MINERS ACHIEVE UPSIDE BREAKOUT... The price of gold continues to rise. Chart 1 shows the Gold Shares SPDR (GLD) trading higher and nearing another seven-year high. Gold miners, however, are doing even better. The daily bars in Chart 2 show the VanEck Vectors Gold Miners ETF (GDX) jumping more than 5% today. That means that gold miners are now rising faster than the metal. And are also achieving a major upside breakout.
GOLD MINERS ETF REACHES HIGHEST LEVEL IN SEVEN YEARS...The weekly bars in Chart 3 show the VanEck Gold Miners ETF (GDX) rising above its mid-2016 peak to reach the highest level in seven years. That bullish breakout puts the gold miners in sync with the rising price of gold and suggests that both are now heading higher together. In fact, gold miners are now starting to rise faster than the metal. And the stock market.
GOLD MINERS ARE OUTPACING GOLD..Chart 4 plots a relative strength ratio of gold miners (GDX) divided by the price of gold (GLD) and shows that ratio now trading at the highest level in three years. That means that gold miners are now rising faster than the commodity which is usually a positive sign for both.
GOLD MINERS ARE ALSO OUTPERFORMING THE S&P 500... Chart 5 shows a relative strength ratio of gold miners (GDX) divided by the S&P 500 rising to the highest level since 2016. That means that gold miners are now outpacing the stock market. In the past, investors have turned to gold and its miners in times of financial stress as a safer alternative to stocks. Historically low interest rates also make non-yielding gold more appealing. And given all of the uncertainties surrounding the Covid-19 virus and its weakening effect on the global economy, the move into gold assets is another sign that investors remain nervous about the outlook for the U.S. economy and stock market.
