The gold miners’ stocks have blasted higher in this young new year, far outpacing the broader markets. But surprisingly gold stocks’ trading volume has diverged from their powerful rally. Volume has actually been waning on balance since gold stocks’ newest upleg was born in mid-December. While volume is a complex nuanced indicator, this bullishly suggests that major gold-stock buying hasn’t even started yet.
Gold stocks’ recent rally is only the vanguard of another MAJOR bull-market upleg:
When American investors buy physical gold and silver bullion, it’s often in the form of these American Eagle 1-ounce coins.
Gold’s first new bull market since 2011 last year was overwhelmingly driven by stock investors flooding into gold ETFs. Traditional physical bar-and-coin demand was actually quite weak, falling considerably year-over-year. Nevertheless, it’s still important to stay abreast of classic gold and silver investment demand. One key microcosm of that comes in the form of the US Mint’s sales of its popular American Eagle coins.
Silver stocks are embarking on a major new bull-market upleg.
After getting crushed in the fourth quarter on a series of anomalous gold selloffs, this sector has rebounded dramatically over the past month.
And silver stocks’ market-leading gains are likely just the vanguard of far-larger ones coming…
Gold has rebounded sharply higher in the past month, taking the early lead as 2017’s best-performing asset class.
Big spec gold-futures buying is coming soon, which will help catapult gold sharply higher again just like it did a year ago. It is already starting with initial short covering, but will soon expand into far-larger long buying as gold continues powering higher. After selling their longs to such low levels, these influential traders will need to buy big for months on end to restore normal positions.
That’s great news for gold!
Gold has hit the ground running in this young new year, a stark contrast to its brutal post-election selloff. Rather remarkably, these strong recent gains accrued despite literally zero buying from one of gold’s most-important constituencies. The American stock investors who almost single-handedly fueled gold’s strong bull market last year are still missing in action since the election.
That means big gold buying is still coming:
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:
2017 looks dangerous!
The US stock markets spectacularly defied the odds in 2016, soaring after both the UK’s Brexit vote and US presidential election. Both actual outcomes were universally feared as very bearish for stocks before the events. These contrary stock rallies have left traders feeling euphoric, convinced stock markets are impregnable. But with stock valuations hitting bubble levels in an exceedingly-old bull, a major bear still looms.
Gold has suffered brutal, withering selling pressure in the month following the US presidential election. The stock markets’ surprise surge after Trump’s surprise win has led speculators and investors alike to rush for the gold exits. As usual the former group’s extreme selling came largely through gold futures. But this gold-futures dumping has been so severe that it is rapidly exhausting itself, a bullish omen for gold:
The junior gold miners’ and explorers’ stocks have been crushed in recent months, collateral damage from enormous gold-futures selling.
That’s naturally left investors and speculators extremely bearish on gold juniors. But lost in all this technical and sentimental tumult are important fundamentals from the juniors’ recently-reported third-quarter financial and operational results, which proved quite strong and bullish:
The silver miners recently finished reporting their third-quarter results, offering a hard fundamental look into this sector. This reality check is valuable given the fierce winds of bearish sentiment buffeting silver stocks in recent months. Despite their huge correction, the elite silver miners’ fundamentals remain strong.
They are producing at costs far below prevailing silver levels, with profits poised to soar as silver recovers.
Most investors and speculators today aren’t paying attention to the gold miners’ strong fundamentals. Instead they are all wrapped up in the fearful prevailing sentiment. That’s a big mistake as always. While gold-mining operating profitability will decrease in Q4 if gold prices remain low, gold’s young bull is far from over.
When it starts powering higher again on weaker stock markets, gold stocks will soar…
Donald Trump’s epic underdog victory climaxing the US presidential race was radically unexpected by the great majority of the world. Equally if not more surprising was the subsequent days’ market reaction. Stock markets, gold, and gold-mining stocks did exactly the opposite of what was universally forecast for a Trump win.
This has left contrarian traders wondering how gold and gold stocks will likely fare under Trump:
For a century and a quarter, this simple stock-market rule has had a 3/4ths chance of predicting how a presidential election will play out. And this year the materially-weak stock markets since mid-August argue strongly in favor of the incumbent party losing. That means the odds of a Trump victory are MUCH higher than traders believe, creating the potential for big market swings if he wins and traders rush to reposition.
The gold miners’ stocks have certainly had a wild ride this year. After initially skyrocketing out of deep secular lows into a mighty new bull market, they recently suffered a massive correction climaxing in an extreme plummet. This coincided with gold stocks’ major seasonal low in October. That heralds their strongest seasonal rally of the year heading into and through winter, a very bullish omen for coming months.
Gold’s early-October plunge on futures speculators’ stop losses being run has naturally left this metal mired in battered technicals and bearish sentiment.
But that sharp selloff has already accomplished its re-balancing mission. The excessive gold-futures trading positions that triggered that stop running have already reversed, and the investors fueling gold’s bull are starting to buy gold again.
Gold is green lighting its next upleg.
The gold miners’ stocks are suffering from universal and overwhelming bearishness today, with nearly everyone expecting further selling.
That’s the natural reaction following this sector’s recent massive correction, which climaxed in one of its biggest daily plummets ever witnessed.
But within bull markets, there’s no better time to buy aggressively than deep in a major selloff that’s riddled with great doubt and fear.
Gold, silver, and their miners’ stocks plummeted out of the blue this week, shattering their bull-market uptrends. Gold-futures speculators had been holding excessive long positions for months, weathering all kinds of selling catalysts. But once gold slipped through key support, long-side futures stop losses started to trigger unleashing cascading selling.
Understanding this event and its implications is crucial for traders…
After rocketing higher mid-year, silver has spent most of the third quarter drifting sideways to lower. This has naturally weighed on sentiment, with investors and speculators alike growing more bearish during recent months.
Yet silver remains way undervalued relative to its primary driver gold, so silver’s young bull market is far from over.
This metal’s upside from here is still massive as it mean reverts higher with gold…
Gold surged sharply this week after the Yellen Fed yet again chickened out on raising its benchmark interest rate. Gold-futures speculators’ irrational fear of Fed rate hikes has been a major drag on gold. And rate-hike risks just plummeted in the coming months, since the Fed can’t risk acting heading into this year’s critical US presidential election. So gold’s next major upleg was likely just unleashed by the Fed.
Gold’s young bull market has totally stalled out in the past couple months. This major loss of momentum following gold’s powerful surges in 2016’s first half is really souring sentiment and vexing traders. They are trying to figure out if gold’s recent consolidation drift is the dawn of a new bearish trend or a healthy pause within an ongoing bull.
The likely answer comes from understanding what’s causing gold’s high consolidation…
Gold stocks have suffered a terrible month, plunging in a serious selloff. The resulting carnage has left investors and speculators shaken, wondering if this red-hot sector’s blistering new bull this year has already run out of steam. These fears are misplaced, as massive corrections are common in major gold-stock bulls.
They create bulls’ best buying opportunities in sentimental, technical, and fundamental terms…