Let’s take a look at the Industrial Metals Mining ETF vs. the Precious Metals Mining ETF. In other words, the miners of mostly cyclical metals vs. the miners of mostly counter-cyclical metals.
A note: 10% of XME’s holdings are in Royal Gold and Newmont Mining, which are predominantly precious metals companies. But XME is overwhelmingly Industrial and thus, positively correlated with the economy.
XME/GDX daily failed at the 50 day average, which is starting to turn down and the ratio is breaking down from a bear flag, with a test of the 200 day average looking likely. The SMA 200 defines the long-term uptrend from 2016. The pattern is unattractive.
The weekly shows the uptrend that has not been broken as XME/GDX consolidates the last high, which was barely a higher high.
It’s just another marker to have on radar moving forward. Much like with the Gold/Industrial Metals and Semiconductor cycle indicators we are managing, this would be a negative economic (and market) cycle indicator if it were to fail.
