Sentiment

Gold-Stock Correction Underway

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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-Stocks Forced Capitulation

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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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