CLICK ON CHART TO ENLARGE
Do you believe in the idea of buying low and selling higher? If so you might want to keep reading this post and take a peak at this hard hit sector.
Few sectors have struggled more in the last two years than the Gold Miners. Miners ETF GDX is down 60% in just 24 months. Ouch!!!
Over the past 90 days, GDX is down 20%, even after yesterday’s 7% rally. Much of this decline could have to do with the U.S. Dollar having the 6th strongest 90 day rally in the past 34 years. This rally has pushed the Dollar up against multi-year resistance as 87% of investors are now bullish the US$ as Josh Brown of The Reformed Broker shares. (See here)
The chart above looks at the grand daddy of all mining index’s, the Gold/Silver Index (XAU). I like this index for a couple of reasons. (1)-It has been around since the early 1980’s, great for long-term perspective. (2)-It includes Silver mining stocks, which is a more in depth reflection of ALL mining stocks. (GDX only covers Gold mining stocks).
It appears that the XAU index is creating a bullish wick at monthly support, as monthly momentum is reaching deeply oversold levels and is making a small turn up as a base is attempting to be made.
Is a “Generational Low” in the miners taking place right now? Todd Shriber of ETF’s Trends discusses this possibility earlier this year, when GDX was at the lows of the year. (see Post here)
Full Disclosure-Two classes of our Members did pick up GDX at the start of this week, due to support and momentum at these levels with specific risk management stops in place.