The junior gold stocks corrected hard in recent weeks, setting them up to blast higher on Wednesday’s less-hawkish-than-expected Fed. That started to dispel some of the serious bearish sentiment that has been mounting in this sector. The junior gold miners’ fundamentals justify much-higher stock prices, as evidenced in their recently-reported fourth-quarter operating and financial results. They remain very bullish.
The gold miners’ stocks have corrected hard in recent weeks, hammered by a gold pullback driven by soaring Fed-rate-hike odds. Like any considerable selloff, this has spawned serious bearish sentiment. But the gold miners’ underlying operating fundamentals remain quite strong, proving the recent selling was purely psychological.
This sector’s just-reported fourth-quarter results are Impressive, VERY Bullish:
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.
While fund manager Adrian Day believes investors should tread cautiously in the market right now, he is upbeat on some gold stocks.
All eyes in the Western gold community should be watching Janet at Jackson Hole on Friday, and all hands should be on the gold stocks buy button!
Gold stocks’ new bull market this year has already proven breathtaking. This obscure sector has nearly TRIPLED within a matter of months, yielding immense profits for the smart contrarians who bought in low. But after such a blistering surge, what’s going to fuel gold stocks’ next upleg?
Heavy gold investment buying driving its price much higher will greatly boost gold-mining profitability, attracting in FAR more capital…
The gold-mining stocks have enjoyed enormous gains in their young bull market this year, trouncing all other sectors. Naturally this radical out-performance has led to surging popular interest in this usually-obscure contrarian sector. New investors are wondering how to best track its performance, about which gold-stock benchmark is the definitive one to use. Something of a battle is brewing over new versus old…
The red-hot gold stocks surged again this week in an apparent early-summer breakout. This strong buying is defying their seasonally-weak odds this time of year. Investors are flocking back to the miners as gold powers higher on also-counter-seasonal strong investment buying. Such unprecedented gold-stock strength in early June highlights how undervalued the miners remain relative to gold, but is suspect…
The gold miners’ stocks are rocketing higher again, multiplying wealth for smart contrarian traders who bought them low in recent months.
But after such a blistering surge, traders are naturally wondering how much farther gold stocks can run.
Is it time to realize gains, or buy aggressively for greater gains to come?
This critical question can be answered by looking at fundamentally-derived gold-stock price targets.
Gold and its miners’ stocks are rocketing higher as speculators and investors alike return to this left-for-dead sector. This sudden deluge of capital inflows has crowned gold stocks the best-performing sector of this young new year by far, shocking traders!
And this stunning reversal of fortunes in both the metal and the companies producing it is only starting, so it’s exceedingly important to understand what’s going on.
The chart below is arguably the global financial markets’ “chart of the year”. The massive bullish wedge pattern in play on this daily bars GDX chart looks truly spectacular.
Note how close GDX is to staging a significant upside breakout above the supply line of the wedge! Within GDX itself, many of the component stocks are staging massive upside rallies.
That suggests a GDX breakout is now imminent.
When some individual gold stocks rise by 100% – 400% in just four months, investors can begin to feel it’s a stock picker’s market. While the best stocks will always produce bigger returns than the worst ones in any sector, I think what is occurring in the precious metal stocks is something very much “bigger”.
There are three powerful forces coming together that could soon create “upside thunder” across the entire gold stocks sector:
Gold stocks’ reign as the most despised sector in all the stock markets remains unchallenged. They’ve even been abandoned by contrarians. But such universal antipathy and apathy is the breeding ground for major bottoms.
And despite gold’s lackluster performance, gold stocks have actually been rallying on balance for 6 months now. Given their extreme undervaluations relative to gold, this strength is likely to persist.
The big action now, is not in the US stock or bond markets, and it’s not in gold and silver bullion.
It’s in gold and silver stocks.
Gold and silver have fallen hard since 2011 and gold and silver stocks have been crushed.
The chart of the XAU shows a November low not seen since 2000. The ratios of the XAU to the S&P and to gold show that gold and silver stocks have been “out of favor” as easy money has levitated the broad stock market at the expense of gold and silver stocks.
Those stocks should “regress to the mean” and move much higher.
I suspect 2015 will clearly show the bottom occurred in 2014 for gold, silver and the XAU. The US dollar already has or will soon peak in 2015, which will add to the volatility and “tailwind” for gold, silver, and their stocks.
Gold could make a new low in 2015, while Janet hikes rates, the dollar rallies, and gold stocks surge higher…
There’s no doubt the gold-mining stocks remain deeply out of favor, collateral damage from the Fed’s gross financial-market distortions of recent years. But sentiment is shifting, with stock traders starting to regain interest in this left-for-dead sector.
Gold-stock trading volume is really growing as capital returns. And since higher volume is an essential precursor to major new uplegs, its growth is a very bullish portent.
Gold surged this week on massive buying from stock investors and speculators. This critical group of traders and their vast pools of capital utterly abandoned gold in the past couple years. So to see them start to flock back is a watershed event, heralding a major reversal in gold’s fortunes.
And with their gold exposure remaining near extreme lows, they have vast buying left to do to restore prudent portfolio diversification.
America is in no condition to endure an economic downturn, yet a downturn is coming, almost as surely as night follows day.
When the next crisis unfolds, I expect the Fed to quietly ask the Chinese central bank to revalue gold, by announcing a major gold buy program.
This would allow China’s currency to become a competitor with the dollar.
Equally importantly, it would allow the Fed to hide the key role that a higher gold price would play, in managing US government debt that is clearly out of control.
As the year 2014 ends and 2015 begins, gold is postured quite bullishly, from both a fundamental and technical standpoint.
China officially imported almost 100 tons of gold in November, and Hong Kong imported about 50 tons.
India also officially imported about 150 tons in November. Clearly, Chindian demand is once again robust, and growing!
The “shock and awe” growth of the Indian and Chinese economies is relentless. That means the growing dominance of the love trade on the global gold price discovery stage, is probably best described as a “clock that can’t be turned back”.
Gold mining companies are entering 2015 with robust demand from China and India, and with a very stable outlook for fuel costs.
This situation should entice substantial numbers of value-oriented fund managers into the sector, throughout the year!
Take a look at the HUI/gold ratio chart below in the year 2000 – 2001 period.
While gold went nowhere, gold stocks surged from late November in the year 2000, until the spring of 2001.
I think a similar situation is on the horizon now.
Is the Western gold community prepared to profit, if it happens? I hope so!
Gold, not stock market casino chips, will be where India puts their growing riches, and rightly so!
With Indian gold demand potentially moving into “overdrive” mode, most gold stocks appear ready to have a great year in 2015!