Gold is a fantastic hedge when market is facing various cases of uncomfortable truths bracing troubled economies.
We’ve been in a bull gold market for 6 years, however, the price is now going sideways. Considering the FED is increasing the rates big time, the real inflation is not going to be significant enough for gold to play a role of a justified hedge.
Anyway, I will provide more detailed analyses and chart on gold later in few days / weeks. Now, let’s have a look at gold stocks!
The price of gold is main driver for gold stocks’ price movements. Since the gold price is moving rather sideways, even still in quite higher levels, the gold mines are loosing steam. Due to the inflation worldwide, companies’ production is expensive and thus, the profit reflects on the balance sheet. This simple fact is already showing on the stockcharts.
The price of GDX, the biggest gold mines etf, has broken down a super long term support level (orange line) and so far not bumping back. Furthermore, the price has crashed the most watched 200 SMA. On balance volume is slumping and when it pierces down the red line, the bear market will become a reality.
I’ve been bullish on gold for six years, publishing many articles with ultimate profit taking. I’m now turning to bear. Unfortunately, the market is changing and thus, a rational investor must adapt too.