The gold miners’ stocks suffered a rocky start to 2021, rolling over into an extended correction after a young upleg prematurely failed. The resulting deeper lows left sentiment overwhelmingly bearish, with this contrarian sector deeply out of favor. But over the last five weeks or so, gold stocks have powered higher again in another young upleg. This one has a far-stronger foundation given the underlying gold setup.
The leading and dominant gold-stock benchmark and trading vehicle remains the GDX VanEck Vectors Gold Miners ETF. It held $14.2b in net assets in the middle of this week, a massive 30.6x bigger than the next-largest 1x-long major-gold-miners-ETF competitor! Several weeks ago I analyzed the top 25 GDX gold miners’ latest quarterly results, which revealed this sector now enjoys
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Following a necessary correction, the gold miners’ stocks have spent much of recent months bottoming. This healthy basing process is rebalancing sentiment, preparing the way for this sector’s next bull-market upleg. That is looking to coincide with gold stocks’ spring rally, one of their strongest times of the year seasonally. That stiff tailwind blowing behind bullish technicals and fundamentals should make for big gains.
Seasonality is the tendency for prices to exhibit recurring patterns at certain times during the calendar year. While seasonality doesn’t drive price action, it
quantifies annually-repeating behavior driven by sentiment, technicals, and fundamentals. We humans are creatures of habit and herd, which naturally colors our trading decisions. The calendar year’s passage affects the timing and intensity of buying and selling.
The gold miners’ stocks are finally perking up again, after spending months slogging through a grinding correction. Contrarian traders are taking notice, starting to redeploy capital in this high-potential sector. Gold miners’ earnings and thus stock prices are overwhelmingly driven by gold’s fortunes. And the yellow metal’s recent technicals are signaling a mature correction, green-lighting gold stocks’ next major upleg.
Bull markets are an alternating series of uplegs followed by corrections, for every few steps forward there is always one step back. These periodic selloffs are essential for bulls’ health and longevity, rebalancing sentiment and technicals before they get too overheated. Popular greed growing too extreme early in bulls will