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Chart 1: Gold vs. Equities
In this chart we plot Gold and Gold against various equity markets such as global equities (ACWI), US equities (NYSE) and Emerging Markets.
Note how each ratio recently held and rebounded from important support (the 400-day moving average). And note how the moving averages are now sloping upward. This recent action serves as confirmation of the new uptrend in the Gold vs. Equities relationship.
Chart 2: Junior Gold Index Bull Analog
In our premium update we noted that the current correction (black) is quite similar to the 2001 correction in price and potentially time.
In daily closing terms, the index corrected 26.5% in 2001 and the correction lasted anywhere from 5 to 6.5 months depending on where you measure it. Thus far this correction has lasted 3 to 4 months (depending on where) and has corrected 24.5% in price. At the least look for the correction in time to continue another 2-3 months. The index gained over 200% in 6 months. That is going to take more than 3 to 4 months to correct.
Late Saturday evening we sent TDG #490, a 34-page update. We covered the usual along with an updated report on one of our smaller positions, an exploration company that has made a major discovery. We are considering adding to the position.
Gold is showing good relative strength right now and that is what we want to see after a corrective phase begins. It is ready to outperform equities again and its looking strong against foreign currencies. This being said, if inflation and inflation expectations continue to rise then the most important ratio in the months to come will be Gold against Bonds. We show that ratio chart in the video and it has a clear resistance level that if and when broken in Gold's favor, will be a key
development in the next leg of the bull market.
With respect to the miners we think more weakness is coming at somepoint be it in price or in time. The correction figures to continue for at least a few more months. The current rebound could continue but we'd look for a retracement before the correction ends. Or the rebound could fizzle out, perhaps if Clinton wins the election and that could lead to a buying opportunity potentially at the end of the month or in early December, before the rate hike.
In any case, we periodically evaluate our positions, hold our winners and dump our losers or weakest positions.
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Disclaimer: This newsletter is intended for informational and educational purposes only and should not be considered
personalized and individualized investment advice. Investment in the precious metals sector contains significant risks. You should consult with an investment advisor and do your own due diligence before making any investment decisions. This email may contain certain forward looking statements which are subject to risks, uncertainties and a multitude of factors that can cause results and outcomes to differ materially from those discussed herein.
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