While the S&P-500 (SPY) and the Nasdaq Composite (QQQ) have been getting all the attention this year as they march to new record highs each week, the Gold Miners Index (GDX) has outperformed them both but has received minimal attention. This is excellent news for the gold bulls, as we’ve got a hated sector that’s flipped to bullish on its quarterly chart, yet most investors are busy chasing tech stocks at bubble-like valuations. As long as the Gold Miners Index can put up a close above $26.00 to finish 2020, the quarterly chart will flip to bullish for the first time in over a decade. I continue to view gold miners as one of the most attractive asset classes heading into 2020 and plan to add exposure on any sharp dips.
If we take a look from a trend-following perspective, we can see that the Gold Miners Index hopped above its quarter moving average (white line) in March, but this signal has now been confirmed by the second quarterly jump in a row in this moving average. While the Gold Miners Index hopped above this level in 2016, the moving average did not assume a positive slope for two consecutive quarters, which suggested that this had a higher probability of being a false signal. This time around, we’re seeing the opposite, with the sustained buying pressure since March allowing the moving average to move into a new uptrend. The quarterly moving average should move up to $24.00 by the end of Q1 2020, and will likely provide a solid floor on any corrections going forward.
This is a big deal for the bulls. This is because it’s the first bullish quarterly signal in a decade, with the last signal coming in December of 2009. From there, the