For much of 2017 the gold mining sector as represented by the GDX has been meandering aimlessly in an increasingly narrow range. The range-bound price action has narrowed to the point that the GDX is currently experiencing its lowest realized volatility since its inception (May 2006):
GDX since inception (Daily ATR-14 at bottom)
The GDX currently has a roughly 1.5% rolling 14-day average true range, which is the lowest realized volatility for the gold sector by quite a wide margin. Today’s action is especially range-bound as the GDX has only traversed a $.15 range (.66%), the 2nd time in the last 4 trading sessions that GDX did not manage a 1% intra-day range.
The calm before the storm or the new normal for gold mining investors? My money is on the former, however, we will need to at least see a decisive rally above $23 or a breakdown below $22.25 in order to have evidence that the range-bound environment has ended and a higher volatility regime has begun.
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