Friday, January 1, 2010

GDX compared to EWZ:XLG ratio

I've been tracking the market value of Brazilian stocks (using EWZ) relative to US large cap stocks (usually with XLG as the denominator) for a few months in anticipation of a double top in the EWZ:XLG ratio and a recollapse of the emerging market bubble. (and yes it's a bubble, people. don't kid yourselves.)

but while I've been focusing a bit on mining stocks this week (see posts on the precious metals complex basket) it occurred to me how similar the major trends have been for the EWZ:XLG ratio and the main mining stock indexes. here's a chart of EWZ:XLG with GDX below it:

in October 2008 both graphs bottomed within a day of each other. and they both hit a high on the same day a month ago. they look different in between but it is amazing to me how closely they align at major turns.