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Absolute Value Research

5 gold stocks indicators giving off rare signals

January 22, 2015

On Tuesday January 20, 2015, five different gold stocks indicators reached rarefied levels. Let's take a closer look at each of them.

$XAU up 2.52% in 12 of 22 trading days

This has only happened twice in the history of the $XAU (the oldest daily gold stock index whose price history dates back to December 1983). The other time was May 6, 1999. That date marked the exact peak of a gold stock rally and the start of a decline. The $XAU went down over 30% over the next 74 days.

 

$XAU up 2.52% in 10 of 17 trading days

This has only happened three times in the history of the $XAU. The other two dates were May 3 & 6, 1999. Gold stocks went up 9.11% from the May 3 close to their May 6 intraday high before dropping 30% over the next 74 days.

 

$XAU up 1.2% in 13 of 22 trading days

This has only happened twice in the history of the $XAU. The other time was January 3, 2003. Gold stocks dropped 8.43% over the next 12 days. They then rallied 13.84% in 9 days to hit a marginal new high before collapsing 25.11% in 48 days. Overall the upside from the January 3 signal over the next few months was 4.25% (21 days later) and the downside was 21.92% (69 days from the signal).

 

$XAU up 1.83% in 11 of 17 trading days

This has only happened twice in the history of the $XAU.The other time was April 14, 1987. That day marked the exact peak of a rally and the start of a decline. The $XAU went down 27.6% over the next 69 days.

 

$XAU up 2.99% three trading days in a row

This has only happened eight times in the history of the $XAU. The prior times are listed below:

August 3, 1984 Gold stocks went down 6.96% over the next 4 days and down 38.88% over the next 721 days.

November 25, 1987 Gold stocks went down 8.83% over the next 9 days and down 24.06% over the next 70 days.

November 27, 1987 Gold stocks went down 16.56% over the next 7 days and down 30.5% over the next 68 days.

February 26, 2001 Gold stocks went down 3.49% over the next 2 days and down 13.97% over the next 36 days.

October 30, 2008 Gold stocks went down 4.36% over the next 4 days and 19.83% over the next 21 days.

July 23, 2013 Gold stocks went down 14.76% over the next 15 days and down 40.74% over the next 470 days.

February 11, 2014 Gold stocks went down 3.3% over the next 2 days and down 37.78% over the next 267 days.

As you can see, when $XAU is up big three days in a row, it soon peaks and then declines. The first bottom is 2-15 days later. Gold stocks then rally. The rally eventually fails and gold stocks go much lower.

The table below is a summary of all the signals listed in this research report. Both the upside and the downside are calculated from the $XAU closing price of the signal date. In other words, any gains were wiped out entirely and then some. Both the upside days (3rd column) and downside days (the last column) are also calculated from the signal date.

Signal Date
Upside
Days
Downside
Days
August 3, 1984 3.79% 61 -38.88% 721
April 14, 1987 0.00% 0 -27.60% 69
November 25, 1987 15.44% 5 -24.06% 70
November 27, 1987 5.65% 3 -30.50% 68
May 3, 1999 9.11% 3 -23.78% 77
May 6, 1999 0.00% 0 -27.41% 75
February 26, 2001 7.27% 11 -13.97% 36
January 3, 2003 4.25% 21 -21.92% 69
October 30, 2008 12.56% 6 -19.83% 21
July 23, 2013 11.22% 35 -40.74% 470
February 11, 2014 8.84% 31 -37.78% 267