Inverse #HeadAndShoulders in #Gold: Is It For Real?

Gold price chart, monthly. stockcharts.com

The Inverse Head And Shoulders Pattern Of The Gold Price: Is It For Real?

John Navin

It may be one of the oldest technical analysis patterns in the world and here it is once again, this time on the monthly gold price chart. When the head and shoulders looks upside down -- inverted -- the technical analysis wisdom is that a base has formed and direction of price has changed.

In his classic work on price chart interpretation, Technical Analysis of Financial Markets, John Murphy provides the best, most detailed explanation of the pattern.

Basically, you'll see a low, a rally that fails to exceed the previous high, then a lower low, another rally and then a low that comes in higher than the previous low followed by an extended rally that takes out the neckline formed by the 2 previous highs.

Will #Gold Companies cease their underperforming status?

Shares in gold miners have massively underperformed the S&P 500 index over the past three years, falling 6 per cent, according to the VanEck Vectors Gold Miners ETF, compared with a 43 per cent rise for the US benchmark.

Longer term, gold miners have massively underperformed the gold price by a large margin, returning a negative 32 per cent over the past 10 years, compared with a 39 per cent positive return for the SPDR Gold Shares, the largest gold-backed ETF. 

Miners' shares lose their shine 

Gold groups should be enjoying a boom. Geopolitical tensions such as trade wars or Iranian sabre-rattling usually send investors flocking to the yellow metal. But in Canada, the traditional centre for the gold-mining industry, cannabis has instead caught investors' eyes.

The most traded stock in the first quarter by volume on the Toronto Stock Exchange was Aurora Cannabis, while Barrick Gold, the world's second-largest gold miner, languished in fifth place.

This lack of interest in the precious metal can be gauged by the drop off in the amount of money being raised by junior miners in Canada, which hit a record low this year at C$635m, according to Oreninc, which tracks the industry. 

See the whole article here: Gold groups eye consolidation to revive fortunes by Henry Sanderson May 29, 2019 3:00 am https://amp.ft.com/content/13452588-7d5a-11e9-81d2-f785092ab560