Precious Metals Or Gold Mining Stocks

Even though the month of June is not over yet, the technical action in gold, as well as some of the gold stocks, have been impressive. So far in June the Spyder Gold Trust (GLD), which reflects the performance of gold bullion, is up 2.5%. In contrast, the Dow Jones US Gold Mining Index ($DSUSPM) is up 8.5% with the VanEck Gold Miners (GDX) up just over 9.6%.

Does this outperformance in June mean the gold mining stocks are better for investors or traders?

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This monthly chart lets the reader compare the impressive performance of the Comex Gold Futures, GLD, and GDX from the October 2008 low to the August 2011 high. The largest gain was seen in the gold futures which were up 370%. The Spyder Gold Trust (GLD) was up 237% and the VanEck Gold Miners (GDX) gained 124%.

However, all three declined sharply from 2011 high but only GDX dropped below the October 2008 low in 2015. Comex Gold declined over 260% from its high but stayed well above the October low as did GLD which was down 172%. Let’s examine the technical charts on these three markets.

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The monthly chart of the Comex Gold perpetual contract shows that it has currently moved higher in June but is still below the resistance from 2014 in the $1390-$1400 area, line a.  The February high at $1349 has been slightly overcome this month.

The monthly OBV was very strong in early 2018 as it made a significant high. A move above the resistance at line b is needed to complete a major bottom. The Herrick Payoff Index (HPI) moved above the zero line in January indicating that the money flow had turned positive. This month the HPI is positioned to move above its WMA.

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The SPDR Gold Trust (GLD) is up 0.44% on Tuesday’s close which is starting off the week on a positive note. For the past three weeks GLD has been trading near the weekly starc+ bands as the downtrend, line a, is also being tested. There is resistance from 2016 in the $130-$131 area.

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