Does GDX follow the price of Gold? Nope. Should it? Nope
Many here confuse GDX with Gold.
GDX is an ETF made up of mining stocks.
Mining stocks do indeed participate in PM "trends", often "leading" rather than following.
IMO, trust that if the trend in PMs is going higher, GDX will pop higher.
If the trend is lower, GDX will drop.
It often is an exaggerated move on the trend.
Also, if PMs have settled into a range, the underlying stocks in GDX will often act jumbled and move on their own, following or leading the whims of analysts or quarterly window dressing of funds.
But you should NOT ever be surprised when they move in what looks like opposite directions.
They don't really.
Now 2 or 3x ecn or etf's are a whole other story.
There, you are also dealing with underlying assets such as options and derivatives that mimic the trends.
And they have a built in decay that over time MUST erode the PPS in relation to underlying asset classes. Thus, they are only for day or swing trading
Just my op.
PS: I am long many miners and physical Gold and Silver.
I trade NUGT and GDX
Exactly, decay is something you have to consider when trying to trade especially DUST and NUGT. Both have traded above $100 and look at where they are now. I use somewhat tight stops when I trade and usually get out too soon because I like to play it safe. I got out of DUST way before the decay kicked in and NUGT with 2 reverse splits doesn't mean it is going to go up substantially either. Sitting on the sidelines for now and if I miss a rally or drop it's ok with me. When in doubt stay the F out. GLTA
The person that wrote the following did the math. Where' sour mat H cmegladon?
The regression model comes equipped with confidence intervals showing just how strong of an influence each asset has on gold-mining stocks. With more than 99% confidence, the model states the relationship between gold and gold-mining stocks is very strong.