Friday, May 6, 2016

Gold-SPX Ratio revisited:Another proof for Gold's bull case

Early this year (Gold:SPX ratio persistent RSI divergence and lessons from the past) we suggested an imminent break out of Gold:SPX ratio in favor of gold. Quoting our mid- January post (right at the beginning of current gold's upmove):"We believe that Gold will outperform SPX for the next couple of years.As we note to the following chart of Gold:SPX ratio,during the last three years of Gold bear market back in late 90's there was a massive divergence between RSI and price.This divergence lasted about 3 years before the start of the massive gold bull run from 1999-2011.Similarities with these days are obvious: Again a huge divergence on RSI and a rounding bottom of Gold:SPX. 3 years since the beggining of the current divergence will be on spring-summer 2016"
Now you can clearly see the breakout of Gold:SPX ratio.Another proof of the current solid bull market for gold.Next target (and obvious resistance area) for the ratio will be the 200 SMA .