Performance Review
In the March 2016 posting on the Gold Stock Indicator (GSI), we said the following:
“As long as gold can stay above $1,184.25 and the XAU Index can stay above 57.96, the chances are that a new bull market in gold is in force. Naturally, a decline below the most recent 1-year lows would erase any notion of a bull market in gold. In spite of a decline below 38.84, the XAU Index is at the most extreme in terms of value. With the assumption that the future will see an oversupply of commodities (a further collapse in prices), investors and speculators who are not averse to a high risk portion of their portfolio should consider investment in gold stocks. First time investors in this sector should start with a position in Market Vectors Gold Miners ETF (GDX), and then wait.”
Since that early March 2016 posting, the price of gold stocks (as represented by the XAU Gold and Silver Stock Index) have increased as much as +78.16% while settling at the current level of +26%.
Meanwhile, the Market Vectors Gold Miners ETF (GDX) has ranged as high as +61% while falling as low as –2.21% and currently sits at a gain of +16% since our March 2016 posting.
One year later and the tale of the market for gold and gold stocks is told in the chart below.
We see that there has been a lot of volatility in the last year but little in the way of change for the price of gold while gold stocks have made some marginal gains. This is where analysis and interpretation are key.