It is a common complaint that Aussie gold stocks are not performing well compared to the AUD price of gold. While this is mostly true when considering the last 12 months, it looks different when observing chart waves, which better represent relative performance.
I have chosen to observe the movement from the bottom of October 2023 to the top of May 2024.
XAUAUD went from a bottom of $2442 to a top of $3794, a move of +55%.
In the same period, XGD went from a bottom of $4221 to a top of $8100, a move of +91%.
While gold made a new all-time high structurally, the stocks did not, which is a problem. However, the move from the bottom was roughly 2:1, as expected in a bull market.
In the XGD chart, it is visible that stocks are on the verge of breaking out of a 4-year-long inverse head and shoulder pattern, which, once broken, will propel the price straight to the $11449 level. Only then will a bull market in gold stocks really commence.
If we switch to the XGD monthly chart and consider the move from the 2016 low of $1642 up to the 2020 high of $9888 as wave 1 of the bull market, then projected Fibonacci extensions for the ongoing wave three (assuming wave two is in place) are: $11834, $13037, $14011, $18134, and $23230.
Once the XGD $7700 level is left behind, I expect the bull market to accelerate quickly. We might have to wait a few weeks or even a couple of months, but once the move begins, it should be explosive.
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