The gold miners’ stocks have suffered a correction since early August, gutting traders’ enthusiasm for this contrarian sector. This necessary and healthy selloff is maturing, after largely accomplishing its essential mission of rebalancing sentiment and technicals. The universal greed and extreme overboughtness plaguing gold stocks as their last upleg peaked has been reversed, paving the way for their next bull upleg.
Since corrections are challenging to weather psychologically, most traders hate them. But they are an integral part of secular bulls, which are ultimately an alternating series of uplegs followed by corrections. By preventing sentiment and technicals from terminally overheating, these corrections greatly extend bull markets’ longevity. Without rebalancing selloffs, bulls would rocket parabolic soon exhausting potential buying.