Comparing Gold Producers To Main Stream Stocks

September 24, 2019
Technical Analyst, Precious Metal Investor & Author

Long-term trends take a long time to reverse.  One such trend compares gold mining stocks to the S&P500 stocks.  From 2002 until 2011 gold mining stocks outperformed generic stocks, as can be seen in the following chart.  (Charts courtesy Stockcharts.com). 

The trend unmistakably featured mining stocks ($HUI) over the S&P500 stocks.  From 2011 until recently, the trend reversed, putting Wall Street back in the lead.  Our next chart shows that we may be about to see a trend favoring miners again.

Featured is a chart that compares gold producers (GDX) to main stream stocks ($SPX).  The fan blades highlight incremental breakouts that show miners are outperforming generic stocks.  Breakout #4 inched above the 50 week moving average (blue line), #5 closed above the 200 week moving average (red line), for the first time since 2016.  The blue arrow points to the spot where another fan blade is likely to be drawn.  The moving averages themselves are rising for the first time in years!  Seasoned observers consider this a very bullish setup, resulting in money leaving generic stocks and moving into the gold sector!

Not to be overlooked is the silver producers sector, represented here by a chart of SIL the silver producers ETF.  Silver usually outperforms gold during a bull market, and SIL is breaking out from congestion, within the rising blue channel.  A close above the blue arrow will confirm the breakout, which could happen this week!

DISCLAIMER:  Please do your own due diligence.  Peter Degraaf is NOT responsible for your trading decisions.

Peter Degraaf is a technical analyst with more than 50 years experience. Google him, or visit www.pdegraaf.com

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Peter Degraaf became interested in silver and gold when the Governments of the US and Canada proceeded to remove silver coinage from circulation in the mid 1960s.

He noticed the effect of Gresham’s law:  “Bad money drives out good.” He became a coin dealer, attending coin shows all over The US and Canada. In 2001 he semi-retired from coin sales and concentrated on investing in precious metals. He mastered the art of technical analysis and applies this to his investments. In 2001 he started publishing a daily and weekly market report.  His website is at http://www.pdegraaf.com/.

Gold is the official state mineral of Alaska.

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