Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Further Clues Reveal Gold’s Weakness - 26th Nov 20
Fun Things to Do this Christmas - 26th Nov 20
Industries that Require Secure Messaging Apps - 26th Nov 20
Dow Stock Market Trend Analysis - 25th Nov 20
Amazon Black Friday Dell 32 Inch S3220DGF VA Curved Screen Gaming Monitor Bargain Deal! - 25th Nov 20
Biden the Silver Bull - 25th Nov 20
Inflation Warning to the Fed: Be Careful What You Wish For - 25th Nov 20
Financial Stocks Sector ETF Shows Unique Island Setup – What Next? - 25th Nov 20
Herd Immunity or Herd Insolvency: Which Will Affect Gold More? - 25th Nov 20
Stock Market SEASONAL TREND and ELECTION CYCLE - 24th Nov 20
Amazon Black Friday - Karcher K7 FC Pressure Washer Assembly and 1st Use - Is it Any Good? - 24th Nov 20
I Dislike Shallow People And Shallow Market Pullbacks - 24th Nov 20
Small Traders vs. Large Traders vs. Commercials: Who Is Right Most Often? - 24th Nov 20
10 Reasons You Should Trade With a Regulated Broker In UK - 24th Nov 20
Stock Market Elliott Wave Analysis - 23rd Nov 20
Evolution of the Fed - 23rd Nov 20
Gold and Silver Now and Then - A Comparison - 23rd Nov 20
Nasdaq NQ Has Stalled Above a 1.382 Fibonacci Expansion Range Three Times - 23rd Nov 20
Learn How To Trade Forex Successfully - 23rd Nov 20
Market 2020 vs 2016 and 2012 - 22nd Nov 20
Gold & Silver - Adapting Dynamic Learning Shows Possible Upside Price Rally - 22nd Nov 20
Stock Market Short-term Correction - 22nd Nov 20
Stock Market SPY/SPX Island Setups Warn Of A Potential Reversal In This Uptrend - 21st Nov 20
Why Budgies Make Great Pets for Kids - 21st Nov 20
How To Find The Best Dry Dog Food For Your Furry Best Friend?  - 21st Nov 20
The Key to a Successful LGBT Relationship is Matching by Preferences - 21st Nov 20
Stock Market Dow Long-term Trend Analysis - 20th Nov 20
Margin: How Stock Market Investors Are "Reaching for the Stars" - 20th Nov 20
World’s Largest Free-Trade Pact Inspiration for Global Economic Recovery - 20th Nov 20
Dating Sites Break all the Stereotypes About Distance - 20th Nov 20
THE STOCK MARKET BIG PICTURE - Video - 19th Nov 20
Reasons why Bitcoin is Treading at it's Highest Level Since 2017 and a Warning - 19th Nov 20
Media Celebrates after Trump’s Pro-Gold Fed Nominee Gets Blocked - 19th Nov 20
DJIA Short-term Stock Market Technical Trend Analysis - 19th Nov 20
Demoncracy Ushers in the Flu World Order How to Survive and Profit From What Is Coming - 19th Nov 20
US Bond Market: "When Investors Should Worry" - 18th Nov 20
Gold Remains the Best Pandemic Insurance - 18th Nov 20
GPU Fan Not Spinning FIX - How to Easily Extend the Life of Your Gaming PC System - 18th Nov 20
Dow Jones E-Mini Futures Tag 30k Twice – Setting Up Stock Market Double Top - 18th Nov 20
Edge Computing Is Leading the Next Great Tech Revolution - 18th Nov 20
This Chart Signals When Gold Stocks Will Explode - 17th Nov 20
Gold Price Momentous ally From 2000 Compared To SPY Stock Market and Nasdaq - 17th Nov 20
Creating Marketing Campaigns Using the Freedom of Information Act - 17th Nov 20
ILLEGITIMATE PRESIDENT - 17th Nov 20
Stock Market Uptrend in Process - 17th Nov 20
How My Friend Made $128,000 Investing in Stocks Without Knowing It - 16th Nov 20
Free-spending Biden and/or continued Fed stimulus will hike Gold prices - 16th Nov 20
Top Cheap Budgie Toys - Every Budgie Owner Should Have These Safe Bird Toys! - 16th Nov 20
Line Up For Your Jab to get your Covaids Freedom Pass and a 5% Work From Home Tax - 16th Nov 20
You May Have Overlooked These “Sleeper” Precious Metals - 16th Nov 20
Demystifying interesting facts about online Casinos - 16th Nov 20
What's Ahead for the Gold Market? - 15th Nov 20
Gold’s Momentous Rally From 2000 Compared To Stock Market SPY & QQQ - 15th Nov 20
Overclockers UK Quality of Custom Gaming System Build - OEM Windows Sticker? - 15th Nov 20
UK GCSE Exams 2021 CANCELLED! Grades Based on Mock Exams and Teacher Assessments - 15th Nov 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Gold Ratio Charts Offer The Keys to the Bull Market

Commodities / Gold & Silver 2019 May 16, 2019 - 11:08 AM GMT

By: Rambus_Chartology

Commodities

Today I would like to update some ratio combo charts which may give us a sense of the bigger picture. Its like putting the pieces of a puzzle together where the small pieces don’t look like much by themselves but when they’re all added together it paints a clear picture. These ratio combo charts are just a piece of the puzzle that may add some clarity to some of the individual sectors.

Lets start with the TIP:TLT ratio chart in black with the TLT in red, which I use for the inflation/deflation debate. Most investors have their own individual stocks they like to look at in trying to answer the age old question, are we in an inflationary or deflationary cycle? When the ratio in black is rising it shows signs of inflation and when it’s falling deflation becomes possible.

On the left hand side of the chart you can see how the ratio in black topped out while the TLT was bottoming in 2011. Also at the bottom of the chart I have added the GDX and the CRB index with the 30 week ema which also topped out in 2011. Since the 2011 high the main trend has been down for the ratio chart in black which shows deflation. In July of 2016 both the ratio and the TLT topped out beginning a consolidation phase that would last for about 2 1/2 years with each forming a triangle consolidation pattern. In November of 2018 both broke out of their respective triangles signaling that we may see some deflation in our future. Again, at the bottom of the chart you can see the CRB index along with the GDX are currently trading below their 30 week ema which is not the end of the world but short term negative. The bottom line is that as long as the ratio in black keeps falling the odds favor a possible deflationary event maybe in the cards in the future.


This next ratio combo chart has the TLT:GLD ratio on top with GLD on the bottom. Remember correlations are never perfect but it is the general trend we want to focus in on.  When the ratio chart on top is rising it generally means GLD is falling. During the 2008 crash in GLD the ratio was topping while GLD was bottoming. Then in 2011 GLD was topping while the ratio was bottoming as shown by the red arrows. From that point in 2011 the ratio has been rising while GLD has been declining.

In June of 2018 the ratio broke out above the top rail of its 2016 falling wedge formation while GLD broke below the bottom rail of its 2016 triangle which was technically a sell signal for GLD. The thin black dashed arrow starting in 2011 shows the uptrend for the ratio and the downtrend for GLD. There is a bit of an aberration taking place currently where GLD is trading right on its 2011 downtrend line while the ratio is trading significantly above its 2011 uptrend line. It will be interesting to see how this divergent plays out in the coming weeks and months. Some of you may recall the 2016 bearish rising wedge on the ratio chart which led to that rally phase in GLD when the bottom rail was broken to the downside. That was one of our clues to get long the PM stocks back in January of 2016 which ended up being a short lived buy signal of only eight months, no big trend change.

This next chart is a combo chart which has the GDX on top with the $BPGDM on the bottom. Buy signals are given when the price action is above the 5 day sma and the 5 day sma is above the 8 day sma and just the opposite for a sell signal. The $BPGDM is currently on a sell signal. There is another way I like to use this combo chart and that is to look for either a positive or negative divergence between the GDX and the $BPGDM as shown by the red arrows. Note the negative divergence at the 2016 high for the GDX vs the $BPGDM which was another signal I used to help get me out of the PM stocks before too much damage was done.

It’s possible we could be seeing a positive divergence taking place between the GDX and the $BPGDM since the December 2016 low. As you can see the GDX has made a lower low vs the $BPGDM in September of 2018 as shown by the red arrows. If both the GDX and the $BPGDM touch their respective trendiness at the same time there will be more PM stocks on a point and figure buy signal vs the 2016 and 2018 lows while the GDX is making a lower low. This would support a bullish setup for the PM stocks.

This next ratio combo chart we’ve looked at fairly recently which has the GOLD:XAU ratio on top with the XAU on the bottom. After the 2016 rally phase on the XAU I was looking for the ratio chart on top to have a small countertrend rally into the brown shaded S&R zone to form a possible H&S top. At the same time it looked like the XAU could also form a H&S bottom. We got the countertrend rally and much more which negated the H&S top on the ratio and the potential H&S bottom on the XAU. Instead of building out a H&S top the ratio has been building out the blue rising flag formation which is not what the PM bulls want to see. That in turn is causing the XAU to decline in its 2016 falling wedge formation. The bottom line is that a break below the bottom rail on the ratio chart on top, would be very constructive for the XAU and PM stocks in general. Until then the better part of valor is to stay on the sidelines.

Below is a shorter term weekly combo chart for the combo ratio chart above which brings into focus the last six years or so of price action. Again, what we want to see is for the ratio chart on top to break below the bottom rail of its rising flag formation which in turn will cause the XAU to rally.

This next ratio chart compares GOLD to the SPX going back 50 years. When the ratio is falling GOLD is in a bear market vs the SPX and vise versa. As you can see the big trends can last a very long time before a reversal is seen. As long as the price action trades below the 200 week sma GOLD is in a bear market vs the SPX.

Below is just a 15 year weekly chart for the GOLD:SPX ratio along with its 200 week sma, which shows just one sell signal for gold vs the SPX in 2013. Earlier this year the ratio made it almost all the way up to the 200 week sma but turned down before breaking out. A breakout above the 200 week sma would be a very bullish development for gold and the PM complex in general.

I had a couple of more ratio charts I was going to show you tonight but for some reason I’ve been unable to download charts from Stock Charts as of about 10 minutes ago. These charts above show you what to look for in regards to seeing confirmation that a new bull market in PM complex is truly underway

All the best

By Rambus Chartology

https://rambus1.com

FREE TRIAL - http://rambus1.com/?page_id=10

© 2019 Copyright Rambus- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Rambus Chartology Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules