Gold-Oil & Gold-Industrial Metals

This blog is about trading and following stocks and markets. Therefore we focus on gold STOCKS vs. the metal. In other words, the format assumes the reader is a trader and has already attended to putting his or her house in order by addressing debt, physical metals and asset allocation. Gold stocks are NOT gold, but they sure are fun to follow and trade. There are times to be all in gold stocks and there are times to be weary. A lot depends on how the gold miners' product is doing vs. the gold miners' cost inputs, such as oil and also whether the global economy is in a strong growth mode as evidenced by strong industrial metals such as copper, nickel, etc. That is why we follow charts like Gold-Oil and Gold-GYX. Both remain bullish for relative gold to a bottom feeder like me. Therefore I must remain bullish on gold miners' profit growth prospects going forward.

The following charts present a picture of gold having bottomed - a potential inverted head & shoulders vs. oil and double bottom vs. GYX - but that is the best we can say at this point. If these patterns remain valid and gold makes a strong relative move up vs. oil and GYX, you will know that gold producers are receiving a positive jolt to their bottom lines and we can expect that famous leverage to the price of gold to kick in once again. But first things first, let's watch and see how the bottoming process plays out.

Click chart to expand



Note previous post showing HUI support in the 330 to 333 range. This area was hit yesterday. I considered it a buying opportunity and added a bit to favorite positions. If that support zone is lost however, it is right back to a very cautious stance.

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Disclosure: Long miners such as MRB, GRS, MFN, GFI, GG, CPY.v & CGK.v. Long Yen via FXY. Long USD via RYSBX, SHY & plenty of cash. Also long PVX & PWI in the energy patch.