Many investors consider a decline of 20% or more to be a bear market. We can debate the merit of the random 20% figure, but according to that definition, gold miners, down 25% from its peak on October 22, are in a bear market. We have noted numerous times in the last month or so that gold and gold miners were getting very overbought based on their technicals. Furthermore, our recent article – Why Is Gold Surging? – highlights how the price of gold is diverging from its fundamentals. As we wrote:
The speculative atmosphere can continue, but beware because gold is getting overbought and deviating from its long-term fundamental drivers. When speculative momentum fails, gold may eventually catch down to its fundamental relationships.
The SimpleVisor graph below
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