The positive divergence now appearing on the price chart of a benchmark gold mining stock ETF is a pattern that might be worth paying attention to. Gold the metal peaked last year along with all of the publicly traded mining companies that dig for it.
With the cryptocurrencies on a non-stop tear during that same period, it’s highly likely that “store of value” seekers may have moved from precious metals to precious computer code.
Not to mention out and out newcomer speculators on Robinhood who have yet to experience real, genuine fear when investing.
In the meantime, here’s this price chart pattern for the VanEck Vectors Gold Miners ETF that suggests the potential for change:
Indicators like this do not necessarily serve as the basis for absolute certainty when it comes to predictions. What you get with a positive reading between the direction of price and the direction of the moving average convergence/divergence (MACD) is a heads-up.
You want to sit up and pay attention in the way a Texas Hold Em player does when holding a pair of 4’s and then a 4 shows up on the flop. You may or may not win the hand but your chances — now that you hold a set — have improved. That’s similar to the way it plays out with a clearly positive reading on a key price chart indicator.
The VanEck Vectors Gold Miners ETF is widely diversified, containing 55 different companies with operations around the globe. Here are the 3 components with the most similar chart patterns to that of the larger fund:
Based in Canada and paying a 1.29% dividend, this New York Stock Exchange-traded precious metals miner is having great earnings years recently. Shareholder equity greatly exceeds long-term debt. The p/e of 39 is higher than most metals, but that likely reflects the popularity based on earnings and little debt.
Also headquartered in Canada and NYSE-listed, this one pays a dividend yield of 2.3%. The price/earnings ratio is 28.9. There’s little debt, long-term or otherwise and earnings lately are in the green.
This South African-based miner is traded on the New York Stock Exchange and pays a 2.22% dividend. The p/e of 9 is lower than the others and may reflect some concern about the amount of debt on the books. Earnings are good this year and good over the past few years.
What’s especially intriguing about all of the above is the way it’s developing while market participants are so distracted by the relatively new phenomena of cryptos.
Under the cover of this unusually feverish enthusiasm for Bitcoin, Litecoin, Ethereum XRP and the rest, it’s likely most observers are missing or may be ignoring the way this gold miners ETF and its components seem to be lining up.
Stats courtesy of FinViz.com.
I do not hold positions in these investments. No recommendations are made one way or the other. If you’re an investor, you’d want to look much deeper into each of these situations. You can lose money trading or investing in stocks and other instruments. Always do your own independent research, due diligence and seek professional advice from a licensed investment advisor.