“Gold stock charts – all negative”

Gold stock charts are all negative, says a writer at GoldSeek

I am not seeking to be critical of another analyst (who I actually know nothing about), but instead want to critique the article based on its stated views, using only charts.

I am a chart guy, after all, and so I take notice when analysts use nominal charts in a vacuum to form conclusions (especially alarming ones) rather than using an integrated technical and macro fundamental approach. That’s because I am a chart guy whose technical abilities (in a vacuum) are limited because TA itself is limited. 

Hey look, it’s a good thing, not a bad thing (if you’re a gold stock bull) that there is a dissenting voice out there amid the cacophony of perma-bullish ones.

Gold Stock Charts – All Negative

Do you know what? He is right. Gold stock charts have been negative since HUI dinged (within a hair) our most recent upside target of 375 back in 2020. But let’s examine the rationale for this gentleman’s view, shall we?

In essence, the article talks about how far down GDX is compared to previous junctures using 1 year, 2 year, 10 year and 15 year charts and concludes…

Summary of the author's view on gold stocks

A problem with the analysis above? Well, it’s the same problem that I’ve highlighted repeatedly when men stare at charts and form drastic conclusions based solely on them.

The article discusses nothing about the macro conditions that were in alignment with a bearish gold stock view for a majority of the 2011 to 2022 period. Gold stocks – to the consternation of the promoters – were supposed to be kicked to the curb in favor of speculative assets because that was the environment routinely cooked up by the Fed, which never saw an inflation opportunity it did not like.

But the macro is shifting and in NFTRH analysis, the tools the Fed has dutifully (and corrosively) used over the last couple of decades have either gone dysfunctional or outright broken. Looking at gold stock charts as a bottom feeder, of course they look like crap. From a technical standpoint, a bullish view is not yet proven. That is why I routinely look at macro fundamental charts as much or more than nominal charts of gold stocks.

If the favored macro view comes about, gold stocks will leverage it to the bull side, either after another correction or after this blip that began today (a routine pullback to test short-term technical parameters). I may be mistaking his message, but if he’s using the fact that gold stocks are and have been bombed out technically, well, Men Who Stare at Charts… captains of the obvious.

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