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There is a myth that I’ve been trying to dispel for many years which is, in order for gold to go up the stock markets have to crash and burn. Sometimes that is true and other times it’s not true at all. There can be long periods of time when they both can move in the same direction either up or down. My experience through the years is that when we see both moving up in their respective bull markets at the same time, this can be very bullish.

Below is a long term monthly triple combo chart which has the SPX on top with Gold below and the GDX on the bottom. The green shaded areas show how all three move up together while the white area shows the inverse look when they trade opposite to each other. I won’t spend a lot of time explaining this combo chart as we’ve been following it for a long time and is pretty self explanatory.

Lets start at the 2016 low which was the last important inflection point when gold put in its bear market low after topping out in September of 2011. The white area shows the inverse correlation as gold was beginning its new bear market while the SPX continued on its merry way in its 2009 secular bull market. Just before that all important 2016 low in both the SPX and Gold the SPX built out a fairly large consolidation pattern that doesn’t look like much now on this long term chart, but back then it was the biggest correction since the 2009 low. As you can see Gold and the GDX each formed a small double bottom at their respective 2016 low which have never been challenged.

Since that critically important 2016 low both the SPX and Gold have managed to move together to new all time highs with both now experiencing their current correction together along with the GDX. This combo chart also shows you just how undervalued the GDX is to Gold as it is still trading significantly below its all time highs. If there was ever a time for the PM stocks to start outperforming gold now would be as good a time as any. Also the next time you hear investors taking about how the US stock markets needs to crash for the PM complex to go up, be careful what you wish for.