A funny thing happened while gold was on its merry way to $2,000.
It dumped.
Which is a convenient way of saying the powers-that-be are still a force to be reckoned with.
This latest setback in precious metals means that - believe it or not - the S&P 500 has actually out-performed physical gold since March, 2009.
SPY vs Gold
Where gold stocks are concerned, it's close enough to equal to call the comparison between SPY and GDX, "on par."
SPY vs GDX
GDX was rescued by a trend line on Friday, but the bearish wedge that's almost three years in the making is staring gold bulls straight in the face. When the assault started on gold stocks in 2008, never once did the GDX venture this far outside the Bollinger Bands.
GDX
The comparisons between SPY and the GDX have to be given serious consideration here. When the markets initially topped in 2007, the GDX ignored the warning signs as precious metals bulls - convinced the world as we know it was doomed - continued to drive up the prices of gold stocks. Five months later, gold stocks topped, and when the dust settled, the GDX had lost more, on a percentage basis, than the S&P 500. A lot more.
And here we are ........
Not quite four years later, but the comparisons are ominous. The S&P 500 topped almost five months ago and gold bugs once again didn't heed the warning signs .... and we've just suffered through a similar drop in gold stocks vs what took place in 2008.
SPY vs GDX Five Year Weekly
What's that mean, exactly?
It means that since March of 2008, anyone invested in GDX has made no headway .... Friday's close was within pennies of the highs reached in 2008.
Well, "no headway" isn't exactly correct .....
You see, if you had bought GDX at the top in 2008 (and many a fool did), you'd have done so when the US dollar was at historical lows. So, if you've hung on through all of this, you can actually thank the US currency because your GDX would have made absolutely no gain except for the recent rise in the dollar.
Go figure.
GDX and the US Dollar
