Is it Time to Mine for Gold?
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When it comes to portfolio construction, here is an interesting strategy: "BUY LOW, SELL HIGH!" Ever heard of it?
If we would attempt to apply this strategy today, where would we look to find something to buy that is "low" right now?
The chart below reflects that over the past year, the Gold Miners ETF (GDX) has underperformed the S&P 500 by over 50%. Is that enough?
Is the year-long relative weakness about to end for the miners?
The Gold/Gold miner ratio sets near all-time lows and is working on a breakout, in the inset above. GDX is nearing the top of its falling channel.
GDX has NOT broken out at this time!
For Miners to move from a relative weakness play to a relative strength play, they have to take out resistance!
If they take out resistance, GDX would be a good place to apply the old "Buy Low" strategy.
(c) Kimble Charting Solutions