On January 23, 2016 I wrote an article called "The gold industry's million dollar question". At that point people (including me) were wondering when the bear market in gold equities would be over. I used Newmont Mining as a benchmark for all the gold equities, which may not be realistic but I found a rather interesting chart pattern. It appeared that the 1996 - 2000 Newmont chart looked exactly the same as the 2011 - 2015 Newmont chart.
You can read the article here or simply have a quick look at the chart comparison I made.
https://ceo.ca/@luctenhave/the-one-million-dollar-question
It was telling me that if the bear market duration would be similar, we were almost at the end of the 2011 - 2015 bear market. Maybe it was just luck but it turned out to be correct.
Now, two years later, I wanted to know if the bull market (the share price recovery) would look the same again.
Conclusion:
- The 2016-2017 chart looks different than the 2001-2002 chart but in terms of two years performance there is no major difference (+155% vs +125%).
- The 1996 - 2002 chart (7 year period) still looks pretty similar to the 2011 - 2017 chart (7 year period).
- If the 2018 - 2019 chart will also look similar to the 2003 - 2004 chart we have two good years ahead of us (if Newmont is still an acceptable benchmark for the gold equities in general).
I have no idea if this makes sense but I will probably do this same exercise again 2 years from now (early 2020) to see if this simple comparison helps in forecasting the gold equity performance.
Please note that the charts shown above are created by using a piece of software (like paint) that copied the chart pattern as an image. Therefore the chart line is not exactly correct it is good enough for this purpose.
