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moonlightxpress

Registered: Jan 2009
Posts: 87

11-06-09 06:19 PM

gold is reaching highs while gdx is not..what gives?

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loufah

Registered: Nov 2001
Posts: 812

11-08-09 12:51 PM

Going up over 10% in one week isn't enough for ya?

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Trexticle

Registered: Jun 2009
Posts: 44

11-08-09 06:04 PM

There is more perceived risk with anything paper than the actual metal. You have to own the metal. The stocks that make up gdx can easily be manipulated but the actual metal has real supply and demand. Metal futures can be sold by anyone or bank or fed trying to make the dollar look good, by temporarily and artificially driving the price down, but the actual price of the metal will be stronger just because of its limited supply. In the spring of 2008 when gold hit a high of 1030, I believe this is when Bear Sterns went under, you couldn't buy gold for even $100 over spot. There wasn't any available. I remember seeing quotes on Bullion Direct for Buffalo Heads for $1250. That was the cheapest anyone would sell them for at that time.

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moonlightxpress

Registered: Jan 2009
Posts: 87

11-08-09 07:35 PM

gdx was at its high when gold was around 1050, now gold is close to 1100 and gdx is like 2 off its lows, thats a pretty big disparity..i will play on the short side on this etf..

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Trexticle

Registered: Jun 2009
Posts: 44

11-09-09 12:20 AM

Quote from moonlightxpress:

gdx was at its high when gold was around 1050, now gold is close to 1100 and gdx is like 2 off its lows, thats a pretty big disparity..i will play on the short side on this etf..

That's probably not a bad idea. When gold is making new highs and GDX is not, then that should tell you something. The only problem with that is that there is always the chance that gold goes parabolic like it did in the 80's which would take GDX for a ride also.

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ccwells

Registered: Nov 2009
Posts: 15

11-09-09 02:16 AM

I have also been watching the divergence between GLD and GDX. Another significant divergence is that between Gold and Silver (GLD, SLV). I believe this divergence is not healthy for the future price of gold. Time will be the judge.

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