G, Goldcorp update

g may 31 2016 bg may 31 2016 s

Goldcorp has behaved much like ABX, however it has not been anywhere near as robust having gained only 1.8X against 3.1X. Nevertheless the EW count is essentially the same. Either a full correction is done and over with (beige) and we are in a new bull market on our way to new highs, or, this is just a first leg up in an unfinished correction that may take us to , say, the halfway mark only to then resume the down-trend to new lows, below those of just a few months ago.

has not yet retraced the full length of the wedge, which is sort of a minimum (unlike ABX that has done more than that). This stock may only make it to $32 (4th wave) or $35 (50%). First it needs to go lower to properly retrace the first leg up.

Personally I do not believe that we are in a new bull market. Gold stocks can easily have a negative value if the marginal costs of extraction starts to exceed the market value. 95+% of all gold ever mined is still above ground and consequently the “marginal” miner has no influence on the price when withdrawing his production. In fact gold mining is intrinsically a very stupid endeavour. We spend a fortune finding it and then another fortune extracting it. Then we bury it in a vault where it is less safe than where it was before. The whole process is quite extraordinary and very wasteful.

The XAU lies somewhere in between ABX and Goldcorp, so a little less robust than ABX but stronger than Goldcorp. The XAU is the Philly gold index which contains 13 of the major gold diggers. It is in US$$.