Gold Miners Holding Up Well Could Spell Strength Of Current Gold Cycle

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I’m encouraged by what I see with the Miners.  For the first time since the markets topped, investors are not pricing in a failure of the Gold Cycle.  Generally, the Miners will overshoot the Gold Cycle both on the high side in a bull market, and on the downside in a bear market.  They are leveraged to the price of Gold and carry a higher beta, so can be much more volatile around key Cycle pivots.

But not this time (so far).  The Miners have traded passively and are not as oversold as we have come to expect in a move by Gold toward a low.  Also, it’s bullish that 30% of mining stocks still show bullish P&F charts – the Miners are clearly holding up well at present.  In contrast, during the December ICL, the Miners’ IC failed a full 4 weeks before Gold found its own ICL.  Today however, with Gold potentially approaching a major low, the Miners remain 10% above their December ICL.  In addition, the volume in Miners is light.  There simply doesn’t appear to be as much interest in selling the Miners as during past ICLs.


GDX weekly price chart


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