Courtesy of Chris Kimble.
CLICK ON CHART TO ENLARGE
This chart looks at the S&P 500/Gold Bugs ratio over the past 20-years.
As you can see the ratio trended lower from 2000 to 2011, reflecting that the Gold Bugs index was stronger than the S&P 500 for over a decade.
Over the past 4-years the opposite has been true as the S&P 500 has been much stronger than Gold stocks (S&P done well since 2011 and Gold Bugs index is down nearly 70%).
Is a change of trend about to take place in this ratio?
Of late the ratio hit the 50% retracement level of the 2000-2011 decline and a steep rising resistance line. At this time one can NOT say the trend has changed, because it hasn’t!
What would one look for to see if this trend is truly changing? I would look for this ratio to break support and if the GLD/SLV ratio and the GDXJ/GDX ratio (shared with metals members each week) also breaks support at the same time, odds ramp up a trend change in the hard hit metals complex is changing.
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