Don’t buy the gold miners until this happens: Technical analyst

Gold mining stocks have skyrocketed this year, and at this point investors might want to wait before hopping into the hot trade.

"Gold stocks are still in a primary uptrend, but have been pulling back recently with the other defensive areas of the market," MKM technical analyst Jonathan Krinsky said Monday on CNBC's "Trading Nation."

Yet even with a recent dip, the popular GDX ETF tracking the miners has surged 115 percent in 2016.

At this point, "if you're looking to buy it, maybe wait for a test to the 50-day moving average, which is rising," said Krinsky. "It's around $29, and we haven't tested that since May. So if we get a test there, that probably would be a good entry point."

Krinsky believes that investors need to also pay attention to the ratio of gold miners to gold.

"Typically in bull markets and precious metals, you will see the equities outperform the commodity, and that's what we've seen for the most part of this year," he said. "So if you look at the ratio of GDX versus [gold-tracking ETF] GLD, as long as that ratio is moving higher and the primary trend is higher, it's probably [fine]."

Stifel Nicolaus portfolio manager Chad Morganlander encourages investors interested in gold to buy the GLD rather than the GDX.

"There is individual equity risk when buying the miners," while in GLD, "you could get the thematic right by buying GLD and actually hedge your bet on your portfolio overall," Morganlander said on "Trading Nation."

GDX on Tuesday recovered slightly from an almost 2 percent drop on Monday as gold hit a two-week low.

Disclosure: Stifel Nicolaus has a position in GLD.


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

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