The shiny metal and its miners

I guess it’s needless to say that I am a commodities bull. After all, even if you haven’t followed my blog regularly, you can tell this from my last post. This doesn’t mean that the price of commodities will only go up. There will be short-term cycles with corrections, even very quick ones, to shake the excessive excitement. Similar to what we see in cryptos today. This is just normal market behavior.

While gold didn’t get much of an appreciation lately, it had a very decent year. But I think it was only a beginning. I think gold could easily double or triple in the months to come.

There have been many head winds for gold in the second half of 2017. Due to the same arguments I had second thoughts about the dollar thesis, but we could start seeing some real tail winds for the precious metal! Let’s take a look at the following chart of Gold Miners GDX.gdx
We see that it is breaking out of a huge triangle consolidation. This is for sure a major bullish development if you ask me.

If we take a look at the ratio between Gold Miners GDX vs the S&P 500 SPX, we see that there might have been a failed break lower this past December where a lot of weak hands have been shaken out. gdx_spx
Continued strength in the ratio would suggest an over performance versus the SPX and additionally confirming the thesis.

While GDX stays above 200D MA, it’s hard for me to be bearish. If we get a confirmation in spot gold getting above $1350 or €1100, then we really should not be afraid of accumulating it!

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