The Power of the Pattern reflected on 2/5 in the chart below, that despite Gold Miners being very weak over the past few months, they could get “Whacked on the Head” again. (see post here)
Since the 2/5 posting GDX has declined over 9% in 23 days.
CLICK ON CHART TO ENLARGE
Has it paid to try “Catch a Falling Knife” when it comes to the miners of late? No!
Many have continued to site that the Gold-Gold Stock ratio is at 30-year lows (see lower left chart below) and now is time to buy the miners…they have said this for months, losing money month after month!
Just because a ratio is low, is that a good enough reason to buy? This ratio has been low for years and that hasn’t stopped GDX from losing almost 30% of its value since last summer!
CLICK ON CHART TO ENLARGE
The upper right chart reflects a key breakdown at a potential support point earlier this month for GDX, which once broken a quick decline took place.
Where could potential support come into play for the miners? The lower right chart reflects a 10-year rising channel for the XAU index, with support coming into play around 10% below current levels.
The Power of the Pattern reflects this could be a point where Gold miners could see a bounce in price. If Gold breaks support and falls to the $1,300 support level (see post here), the miners could reach this support line at the same time.
From a long-term perspective (not a trading view), buying Gold at $1,300 and the miners on the 10-year rising support line would look to be a very interesting risk/reward entry point, should they reach these key levels.
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