Gold miners have soared in 2016, far outpacing the price of gold. Gold has rallied approximately 25% in 2016 while the gold miner ETF GDX is up 150%. This huge disparity definitely tells smart investors that these stocks (gold miner ETF) will drop back to reality. However, the question is when?
Based on technical support levels, the key is a break of $29.40 on the daily chart of Market Vectors Gold Miners ETF (NYSEARCA:GDX). A daily close below $29.40 would trigger a massive sell, bringing the GDX to $27.70. This is a fantastic opportunity for traders willing to be short gold miners that also have the patience to wait for this break down.
Note the chart below to see the trend line that will dictate the major break lower…
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