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November 11, 2016

#Gold #MiningStocks Vulnerable to Further Downside

This comment from Paradigm Capital 

Subject: Gold Stocks Vulnerable to Further Downside

Chart 1 - Gold stocks are resuming their downtrend after failing at a retest of the 50-day moving average and downtrend from the August highs.  

Chart 2 – Gold stocks are underperforming the commodity with the GDX vs GLD breaking support along the 200-day moving average.

Chart 3 – Barrick Gold Corp is still above the October lows but vulnerable to further downside.

Chart 4 – Newmont Mining failed at a retest of the August downtrend and 50-day moving average signalling the resumption of the current downtrend.

Chart 5 – Anglogold Ashanti has cracked below the October lows on a new MACD sell signal below the 0 line signalling further downside risk.



Equal Weight Gold Index: Resuming Downtrend

After reaching our technical target, gold stocks rolled over with the equal weight gold index now breaking below the month long uptrend. The breakdown is mirrored in momentum indicators as RSI fails at 50 and MACD triggers a new sell signal in bearish territory. Furthermore, gold stocks remain in a relative downtrend versus the broader market and as such we remain cautious on the space. We expect ZGD to make another lower low suggesting there is still another 10% downside risk for the space.


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