Gold Miners Hit a New Relative Low

From the Desk of Ian Culley @IanCulley

First, gold failed to hold its breakout to new all-time highs.

Then, the silver-to-gold ratio undercut a critical shelf of former lows.

Now, the Gold Miners ETF $GDX is printing a new all-time low versus the broader market!

Is there any sane reason to bet on the miners right now?

Let’s take a look…

Check out GDX relative to the S&P 500 ETF $SPY: 

If precious metals are in a bull market, the stocks that benefit the most in that environment are not making new all-time relative lows versus the broader market.

And if the new all-time relative low isn’t enough, the components of the Philadelphia Gold & Silver Index cover it:

Only one – Eldorado Gold $EGO – out of the 30 stocks in the index did not print a fresh four-week low last week.

Ugly!

Yet plenty of gold mining stocks continue to carve out bullish reversal formations despite the broad near-term weakness.

Orla Mining $ORLA stands out:

ORLA is forming a potential inverted head and shoulder pattern as the 14-day RSI posts a bullish divergence.

It’s constructive. But it doesn’t mean we can run out and buy ORLA – at least not yet.

A decisive close above 3.50 flashes a buy signal with an initial target at approximately 5. 

But I highly doubt a buy signal triggers under the current selling pressure. Nevertheless, I have ORLA on my radar.

Bearish data points are mounting for precious metals. It’s time to clamp down on risk, exercise patience, and track the strongest mining stocks.

Stay tuned.

Click here to watch this week’s Gold Rush Video:

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Allstarcharts Team