Gold Miners Ratio Working On Bullish Breakout
Chris Kimble | May 19, 2015 12:38AM ET
When it comes to buying and holding senior gold mining stocks (via Market Vectors Gold Miners (ARCA:GDX)), they have been a place to avoid for the past few years. The same is even more true of Junior Mining stocks (via Market Vectors Junior Gold Miners (ARCA:GDXJ)), as its performance has even been worse over the past few years.
The chart above looks at the GDXJ/GDX ratio since 2013, reflecting that GDXJ has been much weaker than GDX, by a big percentage. This year the ratio may have created a rounded bottom and of late the ratio is “attempting” to push above resistance.
Historically, if one is to be long the miners, it's usually a positive if this ratio is heading higher. Investors want this ratio to do much better than it has for the past few months, for miners to be in the “clear” so they can finally be a buy and holder of these assets.
GDXJ remains inside of this two year falling channel. Of late it is pushing above falling resistance, which is a positive for this ETF. January highs at $28.89 look to be the next key test for GDXJ as it is pushing higher.
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