Last week gold fell and the double bottom held. The double bottom is intact. The March low was successfully retested by gold and held. I thought it would not be broken, because the GDX/GLD relative strength indicator was telling us that, as I wrote in my August 9th post.
So, once again the indicator held true and it’s one reason why I believe that it makes sense to buy energy and commodity related stocks now. Here is how the gold chart now looks.
Notice how when gold fell last week the GDX/GOLD ratio did not go through its low of the week. That’s a powerful buy the dip signal. It also bodes well for my top stock pick for this month as it’s small cap mining stock that barely fell at all and is actually up for the month despite the big gold dip. You can read about it here.
In case you missed it, I posted this weekend update on the markets and gold to give you my bigger picture views.