Gold stocks were a leading indicator of disinflationary forces that culminated in the 2008 commodities/stock market crash. Gold stocks badly underperformed gold itself before the financial/banking collapse. A large bearish head and shoulders appeared with the right shoulder peaking in July 2008. It was a foreshadow of the carnage to come in the broader market and commodities in particular. Again, we have a h&s that is developing here in 2011. At the same time, gold stocks are poorly underperforming gold itself and now are at one of the lowest levels relative to their underlying in decades — not withstanding the shock lows in late 2008. This is a bearish development for the risk on trading strategies and should be pause for concern. Gold stocks are either badly mispriced or they are indicating some serious trouble in world markets ahead.