Historically, gold miners have led gold prices higher, with miners breaking out before the price of gold and making their largest gains during the early stages of major gold rallies. By GDX rising big despite gold sitting near its 2018 low, it is an extremely bullish sign that a major gold rally is ahead. On Friday, the GDX/GLD ratio surpassed its key breakout point, officially ending a consolidation phase that began 23 months ago after the GDX/GLD ratio exploded for one of its largest short-term rallies in history.
The last time that we saw the GDX/GLD ratio surpass its key breakout point was back on February 5, 2016. After surpassing its key breakout point of 0.1423, the GDX/GLD ratio exploded to a medium-term peak reached six months later of 0.246.
Adding further confirmation to NIA's belief that gold mining stocks will soon explode higher to continue their new secular bull market that began in early 2016 is the fact that a golden cross appears to be imminent. Currently, the GDX/GLD ratio has a 50-day moving average of 0.1822, which is getting ready to surpass its 200-day moving average of 0.183.
The GDX/GLD ratio experienced its last golden cross back on March 3, 2016. On that day, the GDX/GLD ratio reached 0.162, causing its then 50-day moving average of 0.142 to surpass its 200-day moving average of 0.1418. Afterwards, the GDX/GLD ratio gained during 8 of the following 9 weeks.