Six Charts Proving Why Gold Stocks Will Rally but Bitcoin Not So Much

Vaneck Junior Gold Miners ETF (GDXJ) is likely to surpass $56 per share by the end of August 2024.

On February 28th, GDXJ hit what NIA believes was an extreme bottom of $31.20 per share.

When GDXJ closed on February 28th at $31.20 per share, it was priced at 0.1657X the price of SPDR Gold Trust (GLD), which is well below the 10-year median GDXJ/GLD ratio of 0.2469:

Historically, when the GDXJ/GLD ratio declines to below 0.17, GDXJ over the following six months achieves a median gain of 81.47%. From its February 28th extreme bottom of $31.20 per share, a gain of 81.47% in six months will price GDXJ at $56.62 per share on August 28th:

Historically, when the GDXJ/GLD ratio declines to below 0.17, GDXJ over the following twelve months achieves a median gain of 112.68%. From its February 28th extreme bottom of $31.20 per share, a gain of 112.68% in twelve months will price GDXJ at a new 10-year high of $66.36 per share on February 28, 2025.

It is impossible for us to imagine a scenario where GDXJ doesn't achieve these median gains over the next 6-12 months. It is likely to happen regardless of if the NASDAQ continues going up or if the NASDAQ crashes.

To the contrary, for Bitcoin to go up any further it needs the NASDAQ to continue moving significantly higher. Bitcoin's strongest correlation is with ProShares UltraPro QQQ (TQQQ) a triple leveraged NASDAQ ETF:

If you look at the Bitcoin/TQQQ ratio, Bitcoin is trading near the high end of its six-year range:

The six-year average Bitcoin/TQQQ ratio of 659 currently gives Bitcoin a fair value of $38,063.84. Unless the NASDAQ skyrockets higher, Bitcoin is likely to decline by 43.09%.

Crescat Capital posted a very good chart yesterday showing that the enterprise value of the Top 10 largest NASDAQ companies as a percentage of GDP appears to be at an extreme peak that was previously reached in 2021 right when the NASDAQ hit a top:

Past performance is not an indicator of future returns. NIA is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This message is meant for informational and educational purposes only and does not provide investment advice.