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Will Gold Follow Gold Stocks Lower?


A negative sign for gold: Price has been rising with falling open interest, which often signals a weakening market and goes along with the declining buying pressure in GLD.

A pickup in buying pressure in the gold stocks would be a good indicator that the market views gold stocks as cheap compared to gold. Currently buying pressure is still trending lower for gold stocks, but it is slightly off of its May low.

Another good indicator for an end to a pullback in gold is when gold stocks start to outperform gold again. On the chart below we would want to see a lower high form once again on the GLD to GDX ratio, which isn't close to happening quite yet.

One final indicator that is useful is the Bullish Percent Gold Miners Index, which measures market breadth. When this indicator bounces from extreme low readings, indicating deeply oversold gold stocks, then it's more certain that the bottom in gold and gold stocks is in.

Editor's Note: This article was originally published on

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