Lowest Volatility in History For Gold Miners

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)

GDX_12_year

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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