The precious metals sector continues to be a “grind”, offering a few trades but mostly sideways to lower action. Gold prices have slogged along and this had held the Gold Miners ((NYSE:GDX)) back… until recently. The Gold Miners (GDX) and the broader Philadelphia Gold/Silver came to life in September and October.
The miners are in a multi-year down trend, however there is a potential bullish setup in place. See the chart below where we highlight the ratio of the Mining Index (XAU) to the S&P 500 (SPY (NYSE:SPY)). The ratio, which Gold Bugs want to see rising, looks to have created a bullish reversal last month at the 2016 lows at point (1).
And October is seeing a follow-through move to the upside.
If the ratio breaks out above falling resistance at (2), it would be suggesting a long miners / short S&P 500 trade.