Gold-Stock Correction Underway

By Adam Hamilton – Re-Blogged From Gold Eagle

The gold miners’ stocks are correcting.  They’ve been sliding and drifting lower on balance since their powerful recent upleg peaked a month ago.  Corrections are normal and healthy in ongoing bull markets, rebalancing sentiment to pave the way for the next upleg.  They also offer the best buy-low opportunities seen inside secular uptrends.  Deploying capital in gold stocks after corrections multiplies wealth-building potential.

While most people dread corrections, battle-hardened speculators and investors embrace them.  They make prices oscillate around their bull-market uptrends, greatly expanding their overall travel.  The more price movement, the more potential upside to ride.  Today’s gold-stock bull proves this.  Consider it in terms of the most-popular gold-stock benchmark and trading vehicle, the GDX VanEck Vectors Gold Miners ETF.

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Gold-Stock Red October

By Adam Hamilton – Re-Blogged From Gold Eagle

The gold miners’ stocks have largely ground sideways in the last couple months, consolidating their big mid-summer gains.  That drift is slowly bleeding away greedy sentiment, but this sector remains really overbought.  Gold stocks’ dominant driver gold is even more overbought, and still facing a massive gold-futures-selling overhang.  This makes October, gold stocks’ weakest month seasonally by far, particularly risky.

The gold stocks have enjoyed a big run since late May.  Their leading benchmark and trading vehicle is the GDX VanEck Vectors Gold Miners ETF.  Birthed way back in May 2006, its first-mover advantage has proven insurmountable.  This week GDX’s $12.0b in net assets were a colossal 36.4x larger than its next-biggest 1x-long major-gold-miners-ETF competitor!  GDX is the most-popular metric to track sector performance.

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Gold Stocks Gather Steam

By Adam Hamilton, CPA – Re-Blogged From Gold Eagle

Gold stocks’ young upleg is gathering steam, marching steadily to higher lows and higher highs. These bullish technicals are gradually improving sentiment, fueling mounting interest in this contrarian sector. That’s helping the gold stocks regain lost ground relative to gold, the driver of their profits. Fundamentals are growing more favorable as gold itself powers higher. All this portends much-bigger gold-stock gains coming.

Despite a strong rebound upleg in recent months, the gold miners’ stocks are still flying under the radars of most speculators and investors. They aren’t aware the gold stocks are running again, and likely don’t realize how massive gold-stock uplegs can grow. That’s unfortunate, because the biggest gains are won early in young uplegs before they are universally recognized. Buying low early on is the key to multiplying wealth.

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Did We Just Witness The Bottom In The Gold Market?

Mr. Market the Great Deceiver

Markets are deceptive…but we all know that.  Beyond deceptive, markets are actually down right diabolical.  Mr. Market operates through his two most trustworthy lieutenants Mr. Bull and Mr. Bear.  He has tasked Mr. Bull to climb and reach the top of the mountain using investors buying power to fuel the rise.  But he has also instructed Mr. Bull to not allow those same investors to complete the journey themselves, he wants to reach the top without them.  It’s a hard job to pull off and Mr Bull needs to use every trick in the book to throw off these investors after they use their money to power the trend upward.  It’s a process that takes time and Mr. Bull’s prime tools are greed and fear in the minds of investors.

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Gold-Stocks Forced Capitulation

By Adam Hamilton – Re-Blogged From Gold Eagle

The gold miners’ stocks suffered a rare capitulation selloff over the past month or so.  Selling cascaded to extremes as stop losses were sequentially triggered, battering this contrarian sector to exceedingly-low levels.  While very challenging psychologically, capitulations are super-bullish.  They rapidly exhaust all near-term selling potential, leaving gold stocks wildly oversold and undervalued which births major new uplegs.

Capitulations are quite rare which makes them inherently unpredictable.  The vast majority of selloffs end normally well before they snowball into capitulation-grade plummets.  But very seldomly heavy selling just continues to intensify rather than abate like usual.  The word capitulation means “the act of surrendering or giving up”.  That’s exactly what happens in these extraordinary selling events, traders stampede for the exits.

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Cheap Gold Stocks Basing 2

By Adam Hamilton – Re-Blogged From http://www.Gold-Eagle.com

The gold miners’ stocks are drifting listlessly in the summer doldrums, largely forgotten by investors and speculators. They are missing a fantastic opportunity to buy low in this barren sentiment wasteland when no one else wants to. The gold stocks remain exceedingly cheap relative to the metal which drives their profits, and they continue to establish a strong technical base. They are ready to soar as gold returns to favor.

Gold-stock investing feels pretty thankless these days, like an exercise in self-flagellation. Thus there aren’t many traders left in this realm. Week after week as gold stocks continue to drift on balance, the ranks of remaining investors and speculators dwindle. Interest in this sector is among the lowest I’ve ever seen in decades of actively trading gold stocks. They’ve been left for dead as contrarians vanish.

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Cheap Gold Stocks Basing

By Adam Hamilton – Re-Blogged From http://www.Gold-Eagle.com

The small contrarian gold-mining sector remains deeply out of favor, universally ignored. Thus the gold stocks are largely drifting listlessly, totally devoid of excitement. But that’s the best time to buy low, when few others care. The gold stocks continue to form strong technical bases, paving the way for massive mean-reversion uplegs. And they remain exceedingly cheap relative to gold prices, which drive their profits.

Being a gold-stock investor feels pretty miserable and hopeless these days. The gold stocks have been consolidating low for 14.2 months now, stuck in a seemingly-endless sideways grind. There are still gains to be won, but they are mostly within that low-trading-range context. We haven’t seen one of the huge uplegs gold stocks are famous for since the first half of 2016. So most traders have given up and moved on.

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Gold-Stock Upside Huge

By Adam Hamilton – Re-Blogged From http://www.Gold-Eagle.com

The gold miners’ stocks have huge upside potential in 2018, likely the best among stock-market sectors. They really lagged gold last year, so a major mean-reversion catch-up rally is coming. The gold miners are universally ignored and deeply undervalued relative to the metal which drives their profits. And gold itself is likely to power dramatically higher this year as euphoric record-high stock markets inevitably start to falter.

Gold has always been the leading contrarian investment, tending to move counter to stock markets. So not surprisingly investment demand stalled last year as the extreme taxphoria-fueled stock surge blasted relentlessly higher. When stock markets apparently do nothing but rally indefinitely, investors feel no need to prudently diversify their portfolios with the anti-stock trade gold. So they ignored the yellow metal in 2017.

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Major Gold-Stock Breakouts

By Adam Hamilton – Re-Blogged From http://www.Gold-Eagle.com

The gold stocks are off to the races again, with big gains mounting. They just staged major breakouts, shattering a vexing consolidation that had trapped them for an entire year. Such momentum early in gold’s strong season is a very-bullish portent. As higher prices improve both technicals and sentiment, buying begets more buying. With gold-stock prices still quite low in secular terms, their upside remains huge.

Gold stocks are a small contrarian sector without a wide following. So their latest surge has surprised many investors and speculators. But it shouldn’t have. In the markets knowledge is profits, so staying informed about gold stocks’ fundamentals, technicals, and sentiment is crucial. The traders who did their homework this summer and bought in low when few others were willing are now sitting on fat unrealized gains.

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Gold Miners’ Q2’17 Fundamentals

By Adam Hamilton – Re-Blogged From http://www.Gold-Eagle.com

The gold miners’ stocks have spent months adrift, cast off in the long shadow of the Trumphoria stock-market rally. This vexing consolidation has left a wasteland of popular bearishness. But once a quarter earnings season arrives, bright fundamental sunlight dispelling the obscuring sentiment fogs. The major gold miners’ just-reported Q2’17 results prove this sector remains strong fundamentally, and super-undervalued.

Four times a year publicly-traded companies release treasure troves of valuable information in the form of quarterly reports. Companies trading in the States are required to file 10-Qs with the US Securities and Exchange Commission by 45 calendar days after quarter-ends. Canadian companies have similar requirements. In other countries with half-year reporting, some companies still partially report quarterly.

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Gold Summer Doldrums

By Adam Hamilton – Re-Blogged From http://www.Gold-Eagle.com

Gold has spent most of June grinding lower on balance, damaging sentiment and vexing traders.  Usual selling leading into the Fed’s latest rate hike contributed, but the summer doldrums are also in play.  Gold has typically suffered a seasonal lull this time of year, on waning investment demand as vacations divert attention from markets.  But these summer doldrums offer the best seasonal buying opportunities of the year.

This doldrums term is very apt for gold’s summer predicament.  It describes a zone in the world’s oceans surrounding the equator.  There hot air is constantly rising, creating long-lived low-pressure areas.  They are often calm, with little or no prevailing winds.  History is full of accounts of sailing ships getting trapped in this zone for days or even weeks, unable to make any headway.  The doldrums were murder on ships’ morale.

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Gold Miners’ Q1’17 Fundamentals

By Adam Hamilton – Re-Blogged From www.Gold-Eagle.com

The gold miners’ stocks have been slammed by a sharp gold pullback in recent weeks, spawning today’s bearish sentiment.  Traders often get caught up in the emotional swings generated by this volatile sector.  But once a quarter earnings season arrives, revealing gold mining’s hard fundamental realities which dispel the obscuring sentiment fogs.  The major gold miners’ profitability actually just exploded higher in Q1!

Four times a year publicly-traded companies release treasure troves of valuable information in the form of quarterly reports.  Companies trading in the States are required to file 10-Qs with the US Securities and Exchange Commission by 45 calendar days after quarter-ends.  Canadian companies have similar requirements.  Some companies in other countries with half-year reporting instead of quarterly even follow suit.

So the world’s major gold miners are just wrapping up their first-quarter earnings season.  After spending decades intensely studying and actively trading this contrarian sector, there’s no gold-stock data I look forward to more than the miners’ quarterly financial and operational reports.  They offer a true and clear snapshot of what’s really going on, shattering the misconceptions bred by the ever-shifting winds of sentiment.

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Gold-Stock-Bull Upside Targets

By Adam Hamilton – Re-Blogged From http://www.Gold-Eagle.com

The get-no-respect gold-stock sector is in a strong young bull market. Past gold-stock bulls have grown to utterly-massive proportions before giving up their ghosts, greatly multiplying the wealth of contrarian investors and speculators. Today’s gold-stock bull is very likely to grow vastly larger before fully running its course. Fundamental gold-stock-bull upside targets reveal the lion’s share of gains are still yet to come.

A little over a year ago in January 2016, a monstrous gold-stock bear finally climaxed. The gold miners’ stocks fell to fundamentally-absurd 13.5-year secular lows as measured by their leading index, the HUI NYSE Arca Gold BUGS Index. Out of those dark depths of despair, a new gold-stock bull was stealthily born. And it soon started flexing its muscle, rocketing 182.2% higher in just 6.5 months by early August!

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Gold-Stock Breakouts Near

By Adam Hamilton – Re-Blogged From http://www.Gold-Eagle.com

The gold-mining stocks’ usual volatility has proven outsized so far this year, spooking investors.  A fast initial surge in a new upleg was soon fully reversed by a sharp major correction, which spawned much bearish sentiment.  That combined with the great distraction from the Trumphoria stock-market rally has left gold stocks unloved and overlooked.  But their outlook is very bullish, and major upside breakouts near.

It’s hard to find bargains in today’s extreme stock markets.  They’ve been radically distorted by the post-election euphoria centered on universal hopes for big tax cuts soon.  Nearly every sector has been bid up to dizzying valuations.  Except gold stocks, which everyone still hates.  They may very well be the last remaining contrarian sector in these crazy markets, and thus a great buying opportunity for smart traders.

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Gold Miners’ Q4’16 Fundamentals

By Adam Hamilton – Re-Blogged From http://www.Gold-Eagle.com

The gold miners’ stocks have corrected hard in recent weeks, hammered by a gold pullback driven by soaring Fed-rate-hike odds. Like any considerable selloff, this has spawned serious bearish sentiment. But the gold miners’ underlying operating fundamentals remain quite strong, proving the recent selling was purely psychological. This sector’s just-reported fourth-quarter results are impressive, very bullish.

Four times a year publicly-traded companies release treasure troves of valuable information in the form of quarterly reports. Required by securities regulators, these quarterly results are exceedingly important for investors and speculators. They dispel all the sentimental distortions surrounding prevailing stock-price levels, revealing the underlying hard fundamental realities. They serve to re-anchor perceptions.

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Gold Stocks’ Strong New Upleg

By Adam Hamilton – Re-Blogged From http://www.Gold-Eagle.com

Gold stocks are on fire this year, powering higher in market-dominating performance.  This is a massive reversal from their dark fourth quarter, with 6/7ths of those losses already erased.  But this strong new upleg still remains young and small by historical standards.  Gold stocks’ recent rally is only the vanguard of another major bull-market upleg.  This sector’s bullish technicals reveal vast upside potential from here.

The gold miners are a small contrarian stock-market sector that isn’t widely followed.  Hearing about how the gold stocks are faring in the mainstream financial media is pretty rare.  So this sector generally flies under the radars of the great majority of speculators and investors.  That’s rather unfortunate, because the gold stocks have enjoyed some of the greatest gains in all the stock markets in this young century.

The flagship gold-stock index is the NYSE Arca Gold BUGS Index, which trades under the symbol HUI.  BUGS stands for Basket of Unhedged Gold Stocks, as major gold miners can’t be included in the HUI unless their gold production is not hedged beyond 1.5 years.  Running all the way back to June 1996, and having no management fees like ETFs, the HUI offers the definitive read on gold-stock performance.

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Gold Stocks Shine in 2017

By Adam Hamilton – Re-Blogged From http://www.ZealLLC.com

The gold miners’ stocks are rocketing higher again after suffering a rough few months.  Following sharp selloffs on gold-futures stops being run, the Trumphoria stock-market surge, and a more-hawkish-than-expected Fed, this battered sector had largely been left for dead.  But gold stocks’ strong fundamentals finally overcame the dismal herd sentiment last week, paving the way for this sector to shine again in 2017.

This “shine again” assertion likely seems dubious to casual observers, since the gold miners’ stocks suffered a miserable Q4’16.  The leading HUI NYSE Arca Gold BUGS Index plunged 21.1% in a quarter where the benchmark S&P 500 broad-market stock index surged 3.3%.  Naturally gold miners’ profits are fully dependent on gold prices, and this metal fell 12.7% in Q4 which proved one of its worst quarters ever.

Thus no sector has been more out of favor in recent months than precious metals.  Gold and therefore gold-stock bearishness abounded, with bullish outlooks dwindling near nonexistent.  But viewing gold stocks solely through the extremely-distorted post-election lens is a serious mistake.  Despite their sharp Q4 selloffs, this sector as measured by the HUI led the markets by still soaring 64.0% higher in full-year 2016!

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Gold Stocks’ Autumn Rally

By Adam Hamilton – Re-Blogged From http://www.Gold-Eagle.com

The gold miners’ stocks have already enjoyed a phenomenal year, blasting higher with gold’s new bull market.  This sector’s market-dominating performance has been amazing.  Yet incredibly, the gold stocks are only now entering their strongest time of the year seasonally.  Historically during bull-market years the gold stocks have enjoyed massive autumn rallies on average, starting right about now which is very bullish.

Gold-stock performance is highly seasonal, which certainly sounds odd.  The gold miners produce and sell their metal at relatively-constant rates year-round, so the temporal journey through calendar months should be irrelevant.  Based on these miners’ revenues, there’s no reason investors should favor them more at certain times of the year than others.  Yet history proves that’s exactly what happens in this sector.

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Massive Gold Investment Buying

By Adam Hamilton – Re-Blogged From http://www.Gold-Eagle.com

Gold’s powerful surge in 2016 has been driven by utterly massive investment buying.  This is a marked sea change from recent years, where investors relentlessly pulled capital out of gold.  But with that dire sentiment reversing, they are rushing back in with a vengeance.  Major investment capital inflows into gold are an exceedingly-bullish omen, as they are what transform a mere gold rally into a new bull market.

With gold enthusiasm growing, it’s easy to forget how radically different things looked just a few months ago.  Back in mid-December the day after the Fed hiked rates for the first time in 9.5 years, gold dropped to a miserable 6.1-year secular low of $1051.  The popular level of antipathy towards this asset class by investing professionals was mind-boggling.  They universally believed it was doomed to keep spiraling lower.

But with gold so epically out of favor and loathed, it was a dream buy for the rare contrarians.  On the final trading day of 2015 as gold still languished at $1060, I published an essay titled “Fueling Gold’s 2016 Upleg”.  In it I explained what was going to “fuel a mighty new gold upleg in 2016”, drawing much ridicule.  And that usual pattern of early-upleg gold buying has indeed played out exactly like I forecast.

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Gold Stocks’ Major Breakout

By Adam Hamilton – Re-Blogged From http://www.Gold-Eagle.com

The left-for-dead gold stocks have rallied dramatically this past week, surging to a major breakout.  This pivotal technical event reveals the hyper-bearish psychology plaguing this sector in recent months is dissipating, paving the way for investment capital to return.  And given the fundamentally-absurd price levels in this battered sector, this new gold-stock buying is likely just the initial vanguard of a massive new upleg.

Even among contrarians, the overwhelming consensus view is that gold miners’ stocks are doomed to grind lower indefinitely.  Pretty much everyone even aware of this obscure sector totally despises it, the inevitable result of recent years’ dismal price action.  The flagship gold-stock index, the NYSE Arca Gold BUGS Index better known by its symbol HUI, certainly reflects the unbelievable misery in this business.

Over 4.0 years between September 2011 and September 2015, the HUI plunged 83.5% in a bear market of apocalyptic magnitude!  This incredibly-large bear excelled in annihilating all interest in this sector.  Almost everyone capitulated, scared away by the brutal mauling.  Adding insult to injury, the benchmark S&P 500 general-stock-market index soared 63.5% over this same span.  Gold stocks have been dreadful.

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