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Absolute Value Research

4 gold stocks indicators giving off rare signals

January 13, 2015

On Monday January 12, 2015, 4 different gold stocks indicators reached rarefied levels. Let's take a closer look at each of them.

 

$XAU up 2.52% in 9 of 17 trading days
This has only happened 6 times in the history of the $XAU (the oldest daily gold stock index whose price history dates back to Decmeber 1983). The average return of the prior 5 instances 17 trading days later was -18.07%.

 

$XAU up 2.52% in 7 of 12 trading days
This has only happened 7 times in the history of the $XAU. The average return of the prior 6 instances 12 trading days later was -9.56%.

 

$XAU up 1.83% in 10 of 17 trading days
This has only happened 6 times in the history of the $XAU.The average return of the prior 5 instances 17 trading days later was -12.37%.

 

$XAU up 1.83% in 8of 12 trading days
This has only happened 3 times in the history of the $XAU.The average return of the prior 2 instances 12 trading days later was -9.12%.

***

The following table lists all the dates for all the signals.

2.52%
2.52%
1.83%
1.83%
9 of 17
7 of 12
10 of 17
8 of 12
April 13, 1987
April 14, 1987 April 14, 1987
April 20, 1987
December 8, 1987
December 11, 1987
October 7, 1998 October 7, 1998
April 29, 1999 April 29, 1999
May 3, 1999 May 3, 1999 May 3, 1999
May 5, 1999
May 6, 1999 May 6, 1999 May 6, 1999
November 10, 2008
January 13, 2015 January 13, 2015 January 13, 2015 January 13, 2015

 

The talbe below also lists all the signals. This table lists the upside from the close of the signal date (i.e. the equivalent of Monday January 12, 2015) and how many days it took $XAU to peak. The fourth columnt lists the downside from the signal close (not the high) to the subsequent low. The 5th column lists how many days it took gold stocks to bottom. The final column merely lists the uspide/downside ratio.

Signal Date
Upside
Upside
Downside
Downside
Up/Down
April 13, 1987 4.16% 1 -25.14% 70
0.17
April 14, 1987 0.00% 0 -27.60% 69
-
April 20, 1987 5.34% 7 -23.40% 63
0.23
December 8, 1987 10.85% 6 -23.22% 57
0.47
December 11, 1987 3.74% 3 -28.15% 54
0.13
October 7, 1998 1.04% 1 -34.85% 174
0.03
April 29, 1999 10.99% 7 -22.47% 81
0.49
May 3, 1999 9.11% 3 -23.78% 77
0.38
May 5, 1999 3.91% 1 -27.41% 75
0.14
May 6, 1999 0.00% 0 -30.05% 74
-
November 10, 2008 0.00% 0 -24.25% 10
-
 
January 12, 2015

Every top was within 1 week of the signal. Gold stocks went down at least 22.47% from the signal to the low in all instances. The biggest gain was less than half of the smallest drawdown. Therefore, these indicators suggest the reward/risk ratio for gold stocks is quite low.