Get 40% Off
👀 👁 🧿 All eyes on Biogen, up +4,56% after posting earnings. Our AI picked it in March 2024.
Which stocks will surge next?
Unlock AI-picked Stocks

Gold:Miners Ratio Signals Sector Bull Market Ahead

Published 12/26/2017, 12:05 AM
Updated 07/09/2023, 06:31 AM

Here's how markets work: the further they get stretched from the long-term norm in one direction, the more violent the move tends to be when they eventually swing in the other direction. It's like a pendulum. So the bigger the bull market, the bigger the bear market that follows, and vice versa.

Mining stocks have already experienced one of the biggest, most destructive bear markets in history. The Gold / XAU ratio has been bounced around through most of history from between 6 on the high side, which would be undervalued to 3 or 4, on the downside which would be overvalued to the price of gold. In the 2008 bear market the ratio broke out of this long term channel and miners became quite undervalued versus gold.

Then we had the bull market, but as the price of gold moved up and completed the second phase of what I consider its secular bull market, the miners never got to a point where we would consider them to be overvalued compared to the price of gold. Then, by 2015 we had the gold bear market, unlike anything we'd seen so far.

This is where the pendulum comes into play. After one of the most destructive bear markets in history, I think it's going to generate one of, if not the, largest bull markets in history and valuations have started moving back to a more normal level.

Latest comments

Great stuff Gary, way to adapt and recognize what seems to be the cycle bottom. Charts showed me a retest of that bottom trendline sarting from Dec15 lows was likely, but COT, semtiment, amd cycle duration were lining up the other way. I think gold absorbed a ton of selling pressure in the 1265 area on the way down from fall highs.
LOL... this is the same guy calling for sub $1200 gold a few months ago...
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.