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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