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.

The gold miners’ stocks remain deeply out of favor, largely shunned by traders.  Since this sector just spent the better part of a year grinding sideways, such bearish sentiment isn’t surprising.  But with a giant technical formation nearing a major inflection point, things look to be coming to a head in gold-stock land.  A big breakout is nearing, and gold stocks’ deep undervaluation relative to gold argues it will be to the upside.

The junior gold miners’ stocks suffered a serious thrashing between mid-April and early May.
The recent major selloff was totally unjustified.
That makes this battered sector a screaming buy right now fundamentally.

The gold miners’ stocks have been slammed by a sharp gold pullback in recent weeks, spawning today’s bearish sentiment.
However, the major gold miners’ accounting earnings already exploded higher in Q1 without Q4’s big writedowns.  That leaves the gold stocks wildly undervalued even at today’s prevailing gold prices, let alone where gold is heading in coming quarters.  Sooner or later gold-stock traders will realize how irrational their latest bout of excessive fear was.  Then they will flood back in with a vengeance, catapulting gold stocks far higher:

As Billionaire Eric Sprott points out in this MUST WATCH interview with SGT Reportthe reason behind the down-move is actually the opposite of what you may think:

Gold has suffered a sharp pullback over the past couple weeks, stoking much bearish sentiment.  While a variety of factors fed this selloff, the precipitating catalyst was a gold-futures shorting attack.  These are relatively-rare episodes of extreme selling specifically timed and executed to manipulate gold prices lower rapidly.  Traders need to understand these events, which are inherently self-limiting and soon bullish.

The tariff the Trump Administration plans to slap on Canadian lumber imports should lead to a further weakening of the Canadian dollar, a move that precious metals expert Michael Ballanger says can only help the bottom line of Canadian gold producers.

Time to batten down the hatches, mateys.
This chain of developments has the potential to devastate the junior miners in the short run, coming on top of the effects of the GDXJ rebalancing.

What did they know, And WHEN Did They Know It?

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.

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.

Because of the fabulous technical, cyclical, and fundamentals in the precious metals sector, investors can expect solid gains over the next 36 months, with most stocks and bullion likely to move to all-time highs.
Quite simply, from both a real risk and potential reward perspective, it’s the greatest time in history to own the entire precious metals sector!

Gold bar arrowFund manager Adrian Day discusses several mining and energy companies in his portfolio that he believes should appreciate now that the recently released Canadian budget does not include a tax rate increase.