Now that we are shaking off silly season, we can look forward to a market with more dependable signals. That’s the hope and assumption, anyway. Let’s grab an updated look at gold stocks.
As noted recently, a positive divergence by Gold/RINF is in play for gold stocks.
As also noted, the HUI/Gold and HUI/SPX ratios show no divergence, but are just as likely to bottom hard and ‘V’ back up when a rally starts. Here is HUI bouncing within the intermediate downtrend vs. gold and SPX. Inconclusive.
BPGDM continues to work off its froth. It could slip lower, but most of the good work is already done. We’ve been looking for 30 (+/-).
One final and very indirect internal is the state of the Canadian TSX-V index. It is a tailwind for the junior and exploration area of the gold stock spectrum.
As for the fundamentals, gold is booming in relation to copper (positive for the counter-cyclical macro). Gold is potentially bottoming vs. SPX, and as noted in a previous update, Treasury bonds are bouncing to start the New Year and the seasonals are positive. All of which casts doubt upon the continued correction view for gold stocks.
Now, watch it all change tomorrow. But as of today, positives are definitely in play.
Meanwhile, GDX is bouncing back above support for a test of its breakdown below the SMA 200 and the upper (black dotted) channel line. It fill the gap at 37.18 and still be in correction. That would be quite a bounce. But given the seasonal let’s be open to an end of the correction as well.
