Technical outlook on gold, silver and oil, as well as the stocks related to these commodities. My primary focus is on stocks related to these commodities, since I hold several gold, silver and oil stocks in my portfolio. I will be looking at the commodities themselves as well as some ratios that show how the stocks are performing relative to the commodities.

Gold Outlook

Gold is still looking okay, but not ideal. After the strong run that started in 2016 I expected a large pullback (we had that in late 2016) followed by another rally above the 2016 high. My original target was $1525, at which point I would have been looking to get out all my gold-related stock trades. We have had a few issues though. Mainly, gold has been moving up in 2017, but by historic standards (when we have had similar patterns like this play out in the past), the price movement is very weak.

The gold weekly chart shows the first rally, followed by the pullback, and we are now in an overall upward trajectory again. But this time we are moving slower (notice the angle of ascent on this rally is much shallower–these are regression lines) than we were in 2016, which isn’t ideal.

A weak gold rally is typical when the gold stocks aren’t leading. Gold stocks are much more volatile than the commodity, and will often advance or decline significantly more than the actual metal. When gold is rallying strongly we tend to see gold miners surging higher. When gold miners are stagnant to declining, it shows that the gold rally lacks legs.

The next charts shows the ratio of the gold miners index (GDX) compared to the gold EFT (GLD). We can see that recently, even though gold has been edging higher, the ratio is stuck moving sideways. It was for this reason I opted to liquidate some of my metal stocks that were not performing as well. Until the whole industry–that is, mining stocks in general–start to rally, there is a danger that they could see significant declines if gold starts droping again. Also, until that ratio starts moving up (breaking out of that sideways pattern), gold isn’t likely to make a strong surge higher. The rule of thumb is that ideally you want to this ratio and the price of gold moving in the same direction, in order to help confirm the trend direction in gold. Despite the weakness in the gold stocks, two of the stocks in the Canadian Investor Stock Signals portfolio continue to perform very well and are pushing higher most days.

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