Gold Stocks Crash, V-Bounce!

By Adam Hamilton – Re-Blogged From Gold Eagle

Gold miners’ stocks have endured epic volatility in this past month, literally crashing before blasting back higher in a violent V-bounce.  That preceding wicked capitulation flush savagely forced the weak hands out, paving the way for gold stocks’ next major upleg.  The resulting fierce rebound signals it is already underway, with plenty of speculators and investors now chasing the huge gains this sector is famous for.

Perspective is essential and exceedingly-valuable for traders.  If you don’t know where we’ve been and how we got here, you can’t figure out where we’re likely going.  Context is necessary to frame this past month’s extraordinary gold-stock action, and to successfully game where this sector should be heading.  Extreme volatility creates extreme opportunities, neither of which come around very often.  Carpe diem!

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Gold Mid-Tiers’ Q4’19 Fundamentals

By Adam Hamilton – Re-Blogged From Gold Eagle

The mid-tier gold miners’ stocks have been annihilated with COVID-19 fears infecting traders’ sentiment. They crashed with gold getting hammered on extreme gold-futures selling! With blood in the streets, the buy-low opportunities are phenomenal. The fundamentally-superior mid-tier gold miners have epic upside potential during gold’s next upleg. This key sector just reported outstanding Q4’19 results on higher gold.

The sheer carnage in gold-stock-land has been jaw-dropping! In late February, the gold-stock sector per its leading benchmark GDX VanEck Vectors Gold Miners ETF edged up to a 3.5-year high slightly above early September’s. That was fueled by gold’s $1600 breakout surge on COVID-19 fears. Yet as I warned in an essay the trading day before GDX’s peak, gold’s surge was peculiar and precarious lacking normal drivers.

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Big US Stocks’ Q4’19 Fundamentals

By Adam Hamilton – Re-Blogged From Gold Eagle

Stock-market volatility has exploded on COVID-19 fears, shattering the Fed’s QE4-fueled levitation.  The resulting stunning sentiment shift has left investors and speculators wondering where these wild markets are heading.  This is an important time to check the latest fundamentals underlying the big US stocks that dominate market action.  They just finished reporting their Q4’19 results, which illuminate their valuations.

Recent weeks’ stock-market swings have been huge, driven by mounting worries about the economic fallout from the COVID-19 pandemic.  For 6 weeks I’ve covered this virus’s daily progression in depth in our subscription newsletters, including many troubling reports out of China that the media ignored.  Before this selloff, I recommended long-volatility and short-stock-market trades that surged to big realized gains up to +145%.

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Gold-Miner Valuations

By Adam Hamilton – Re-Blogged From Gold Eagle

The gold miners’ stocks have spent the past half-year mired in a high consolidation.  They haven’t been able to break out, but aren’t breaking down either.  This technical purgatory is working to slowly bleed off overboughtness and rebalance sentiment.  This necessary process to eradicate greed from the last upleg peak is never exciting.  But today’s low gold-miner valuations reveal great upside potential in their next upleg.

The world’s leading and dominant gold-stock trading vehicle and benchmark is the GDX VanEck Vectors Gold Miners exchange-traded fund.  It commanded $13.2b in net assets in the middle of this week, 2.7x larger than its next-biggest competitor GDXJ.  The major gold miners’ stocks included in GDX soared this past summer, blasting higher after gold’s decisive breakout to its bull market’s first new highs in several years.

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Gold-Stock Head Fake?

By Adam Hamilton – Re-Blogged From Gold Eagle

Gold miners’ stocks blasted higher this past week, breaking out of their correction downtrend.  Rapidly-improving psychology fueled such strong upside momentum that sector benchmarks are challenging months-old upleg highs.  Most traders assume this is righteous, that gold stocks’ next upleg is starting to accelerate.  But key indicators argue the contrarian side, that this breakout surge is a head fake within a correction.

In early September, a major gold-stock upleg peaked after soaring higher on gold’s decisive bull-market breakout in late June.  The GDX VanEck Vectors Gold Miners ETF, this sector’s leading benchmark and trading vehicle, had powered 76.2% higher over 11.8 months.  It crested the same day gold’s own upleg did, hitting $30.95 on close.  That major 3.1-year high proved the apex of that impressive gold-stock upleg.

Gold started grinding lower after its own September 4th upleg zenith of $1554, capping a massive 32.4% run over 12.6 months.  The gold stocks corrected with gold like usual, as these miners are essentially leveraged plays on gold.  Since their earnings amplify gold-price changes, the major gold stocks dominating GDX generally leverage gold by 2x to 3xSo the gold stocks drifted lower over the next several months.

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The Narrative About Gold Is Changing Again

By Arkadiusz Sieroń – Re-Blogged From Gold Eagle

Teaser: Let’s face it, we live in a world of radical uncertainty. Yet we’re supposed to make perfectly rational decisions – so, how do we cope with the unknown? We tell narratives, and form our decisions around them! Let’s explore the narratives in the financial markets for it reveals their importance to the gold market.

Let’s face it, we live in a world of radical uncertainty. There are not only many known unknowns in the world, but the same can’t be said of unknown unknowns. We simply do not known what we don’t know. In other words, the problem is not risk. The notion of risk implies that we can compute probability. This is what the mainstream economists assume: we know the odds, so there is a single optimizing solution to each problem. But the real issue is that we do not know the probabilities, because we even do not know how the world works. You see, the probability applies in a casino but not in a real world. You are certainly aware of substantial difference between roulette or weather forecasting, and the scope of new inventions or the prospect of war, elections or the asset prices. As Keynes wrote (at least once we agree with him), “About these matters there is no scientific basis on which to form any calculable probability whatever. We simply do not know.”

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Silver Miners’ Q3’19 Fundamentals

By Adam Hamilton – Re-Blogged From Silver Phoenix

The silver miners are finally enjoying higher prevailing silver prices, a great boon for this sector. Silver surged this past summer after gold’s first new bull-market highs in several years rekindled enthusiasm for precious metals. The long-neglected silver stocks rallied strongly with their metal. Their recently-reported Q3’19 results reveal whether those gains are justified, and how much fundamentals improved on higher silver.

Four times a year publicly-traded companies release treasure troves of valuable information in the form of quarterly reports. Required by the US Securities and Exchange Commission, these 10-Qs and 10-Ks contain the best fundamental data available to traders. They dispel all the sentiment distortions inevitably surrounding prevailing stock-price levels, revealing corporations’ underlying hard fundamental realities.

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