Underperformance in Gold Stocks Argues for Interim Peak

news.goldseek.com / By Jordan Roy-Byrne / Sunday, 26 February 2017

The early stages of Gold bull markets (this one included) are characterized by strong outperformance from the miners. They will lead the metals and turning points and register strong outperformance. We saw that in the early 2000s, late 2008 to early 2009 and we have seen it again over the past year. During the recent rebound, the miners rallied back to the “Trump” resistance while Gold is not yet close to doing so. However, unfortunately for bulls, while Gold is now pushing higher above key levels, the gold stocks are lagging. This new and recent underperformance suggests the gold stocks have made an interim peak and will remain entrenched in a correction or consolidation.

In the daily bar chart below we plot Gold, GDX and GDXJ. Gold closed the week up 1.6% and through resistance at $1250/oz while both GDX and GDXJ closed down over 2.5%. That is a strong negative divergence. Gold also eclipsed its early February high while miners did not. Do note that the miners already reached their early November peak (GDXJ exceeded it) while Gold remains some $40/oz below that peak. Buying in the miners reached an exhaustion point.

Read more ... source: The Bitcoin Channel

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