Noted technician and fund manager J.C. Parets has been a long time friend of CEO.CA and E&G. Yesterday he put up a tour de force post on gold and gold miners highlighting the significance of some of the recent price action over various time frames and relative to other asset classes.
We have selected a couple of the choicest nuggets to share. Here’s J.C.:
I think we could have just seen a massive failed breakdown below the 2008 lows (N:GDX). Last Summer prices broke down to new lows and consolidated around there for 6 months. Over the last couple of weeks, prices are now back above both the downtrend line from the 2012 highs and former support from the 2008 lows:
Going forward structurally I would only own Gold Miners $GDX if we are above both the downtrend line from the 2012 highs and former support from 2008. I think we can see $32-33 which represents a filling of the gap in early 2013 and the 38.2% Fibonacci retracement of the entire 2011-2016 decline.
And here’s J.C. on gold vs. stocks:
Next is gold compared with the S&P 500. Here we are looking at a multi-year downtrend channel well-defined by two parallel trendlines. We are now breaking out and a new trend has emerged. I would continue to buy gold and short the S&P 500 against it as long as this ratio remains above the upper of these two parallel trendlines. We still like gold over stocks:
Some pretty bullish commentary from J.C. on both the gold miners and gold. Even better, the risk is clearly identified in both charts. I have been reading J.C.’s blog for years and I recently subscribed to his premium service which includes among many other features an extensive chart book with over 300 stocks and asset classes over different time frames, weekly members only letters, and conference calls with J.C. which allows for a unique flow of idea generation that is unlike any other premium product I have used.