Time To Go Long Gold Miners and Short the S&P 500?

Chris Kimble

The precious metals sector continues to be a “grind”, offering a few trades but mostly sideways to lower action.

Gold prices have slogged along and this had held the Gold Miners (NYSEARCA:GDX) back… until recently.

The Gold Miners (GDX) and broader Mining Index (XAU) came to life in September and October.

The miners are in a multi-year down trend, however there is a potential bullish setup in place. See the chart below where we highlight the ratio of the Mining Index (XAU) to the S&P 500 (SPY).

The ratio, which Gold Bugs want to see rising, looks to have created a bullish reversal last month at the 2016 lows at point (1).

And October is seeing a follow through move to the upside.

If the ratio breaks out above falling resistance at (2), it would be suggesting a long miners / short S&P 500 trade.

Mining Index (XAU) / S&P 500 (SPY) Ratio Chart

gold miners ratio to sp 500 bullish xau spy chart october 22

 

Note that KimbleCharting is offering a 2 week Free trial to See It Market readers. Just send me an email to services@kimblechartingsolutions.com for details to get set up.

Twitter:  @KimbleCharting

Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

NOT INVESTMENT ADVICE – PLEASE READ INVESTMENT DISCLAIMER.