Commodities Countdown

Do You Think Gold Miners Have Made Exceptional Moves?

Greg Schnell

Greg Schnell

Chief Technical Analyst, Osprey Strategic

Since March, Gold has performed in line with the $SPX. However, Gold miners have continued to run, long past the strength in Gold. To put this in perspective, the price of Gold shown by the Gold tracking ETF (GLD), has moved 29.7 % and the Gold miners have run 144.7 %. To watch the Gold Miners ETF (GDX), which is an average of sorts, move 144% in 7 months, has been amazing. 


In red on the 2nd chart panel above, I have compared the performance of the gold ETF to the SPY (GLD:SPY). Gold has performed in line with the US stock market. In the bottom panel, we can see the Gold miners compared to the SPY (GDX:SPY). We can see the GLD:SPY ratio has been sideways since February, whereas the GDX:SPY ratio shows the miners continuing to outperform the SPY in every month but May. 

So when will it end? Is it over already? Let's look at a few other charts for help.

Here is the GLD. Below the main chart, I have plotted three indicators. The Percentage Price Oscillator (PPO) , the 30 Period Standard Deviation (STDDEV), and the 30 Period Rate of Change (ROC). From the PPO perspective, GLD has just hit its stride and could trundle along for multiple years at this level. That looks fine. From the Standard Deviation perspective, this is where GLD usually stops with two exceptions. One was the final blowoff top in Gold, and one was the 2013 rally after GLD had dropped about 30% from the highs. By most measures, the current 7.5 reading of Standard Deviation is extreme. The 30 Period ROC is also near major highs with 2 exceptions. In most cases, these have been significant reversal points. 

Remembering that the move in Gold was only 29 %, let's look at GDX. 

The chart below paints a tremendous story. The PPO is more than double any move since the inception of the ETF. The Standard Deviation never had a bullish extreme at this level. All the other extreme readings were downside price moves. The Rate of Change shows a pinnacle of epic proportions, but 'epic' had been achieved once before. In that case, the correction in GDX was 25%. By any measure, this new bull market move is stretched.

I will be covering off a lot more about Commodities on the next Commodities Countdown Webinar 2016-07-14Click on the link to register. If you cannot join me live, you can check the webinar archives found here. StockCharts Webinar archives. You can also follow me on twitter @Schnellinvestor and LinkedIn. If you would like to receive these articles in your email, please click on the subscribe button below. You can also feel free to forward them to friends and family.

Good trading,
Greg Schnell, CMT, MFTA

Greg Schnell
About the author: , CMT, MFTA is Chief Technical Analyst at Osprey Strategic specializing in intermarket and commodities analysis. He is also the co-author of Stock Charts For Dummies (Wiley, 2018). Based in Calgary, Greg is a board member of the Canadian Society of Technical Analysts (CSTA) and the chairman of the CSTA Calgary chapter. He is an active member of both the CMT Association and the International Federation of Technical Analysts (IFTA). Learn More