Hurdles For Gold Stocks

One problem for the gold stock sector was highlighted here and here evidently a little too obnoxiously for the liking of some bugs. The problem was the aggressive bullhorn sounds emanating from every orifice of the gold community the minute the charts broke upward into an obviously bullish technical state.

But while the HUI/Gold ratio has been a distinctly positive technical indicator and many bullish gold stock charts populated the sector, we had noted back in December that gold’s hysterically overbought performance vs. broad stocks was due to pull back, hopefully in an orderly consolidation. Well, the relief has dragged on and the ratio of gold to SPX and its global fellows has been consolidating alright.

On March 3rd NFTRH 541 noted…

“An update on Thursday morning in pre-market had concern about the similarity of the current weekly MACD situation to the 2016 time frame. By Friday’s close that concern had only been amplified. Weekly MACD is triggered and the ratio is back below the moving average that has contained it since 2016. Not a good look.”

…with respect to this chart. What I did not like was the similarity between the unsustainable launch in 2016’s weekly MACD to today’s situation. Now Au/SPX has crossed weekly MACD down without the launch ever having put a dent in the long-term downtrend. This is another issue.

(Click on image to enlarge)

gold vs. stock markets

I want gold, silver and especially the miners to launch as much as the next gold bug lunatic, but what I want more than that is to be in line with what is happening. And since December’s blow off in anxiety what has been happening is relief and risk ‘on’ markets out-performing gold.

Some will make excuses about evil cabals of financial elites working in concert with globally coordinated Central Banks to quash poor gold and its message that something is not right with the system. Well, I happen to agree with that second part or else, why be a gold bug in the first place? It’s a miserable way to live while the Good Ship Lollypop (AKA the US stock market, especially) sails on.

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