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Gold Bugs Index Testing Long-Term Breakout Level!
By: Chris Kimble | October 10, 2024
The precious metals rally appears to have reached an important juncture.
Yesterday I wrote about Silver and a potential inflection point. Today, we turn to the gold miners and the all-important Gold Bugs Index (HUI).
Above is a โmonthlyโ chart of HUI. Here we can see that the Gold Bugs Index has reached an important confluence of resistance.
The rally has brought the Gold Bugs back to falling trend line resistance, lateral resistance, as well as the underside of the original rally trend line.
In short, this is a BIG area of resistance that will either bring a pause/pullback to the rally, or see a major breakout.
Should the Gold Bugs Index break out hereโฆ..VERY BULLISH!!!
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Gold Minersโ Epic Quarter
By: Adam Hamilton | October 11, 2024
The gold miners are on the verge of reporting another best quarter ever. Q3โs earnings season ramping up soon will prove epic, fueled by dazzling record gold prices and slightly-lower mining costs. That ought to double sector unit profits, extending gold stocksโ long trend of massive earnings growth. Such fantastic results should increasingly catch fund investorsโ attention, with their inflows driving this sector way higher.
Gold stocks remain out of favor, greatly lagging goldโs monster upleg over this past year. This has proven one of goldโs mightiest advances in many years, soaring 46.8% over 11.7 months! Historically larger gold miners dominating the leading GDX gold-stock ETF have seen their stock prices amplify gold uplegs by 2x to 3x. Yet instead of seeing normal 95%- to-140% upleg gains, GDX has merely rallied 60.7% at best!
That very-poor 1.3x upside leverage to gold has been a real kick in the teeth for contrarian speculators and investors. Gold stocks need to way outperform their metal to compensate for the big additional operational, geological, and geopolitical risks they heap on top of gold price trends. Yet so far that sure hasnโt happened in this upleg, leaving traders increasingly disappointed with this lucrative high-potential sector.
Two major factors contributed to this surprising anomaly. First gold-stock sentiment was crushed in mid-2022 and hasnโt recovered. Then the Fedโs most-violent rate-hike cycle ever catapulted the US Dollar Index up an incredible 16.7% in 6.0 months to an extreme 20.4-year secular peak! That spawned colossal gold-futures selling, slamming gold 20.9% lower in 6.6 months. GDX cratered a brutal 46.5% during that!
Second while gold blasted up 26.4% year-to-date, traders have been overwhelmingly distracted by the AI stock bubble. While gold achieved 35 nominal-record closing highs so far this year, the S&P 500 bested that with a whopping 44 of its own! Gold and gold stocks are alternative investments, thriving the most when general stock markets grind lower. Instead theyโve been surging, spinning off vast greed and euphoria.
But sooner or later all that will pass, and gold stocks will be bid way higher to reflect these lofty prevailing gold prices. The gold minersโ phenomenal fundamentals overwhelmingly support this bullish thesis. For 33 quarters in a row now, Iโve painstakingly analyzed the latest results reported by GDXโs 25-biggest component stocks. Right after each quarterly earnings season, I write essays explaining how they are performing.
Across individual gold miners, there are always plenty of distorted bottom-line earnings. These include big noncash gains and losses arising from unusual items ranging from acquisitions to impairment charges. But that noise can be distilled out with an excellent proxy for sector unit profits. It simply averages the GDX top 25โs all-in sustaining costs in any quarter, then subtracts them from its average gold price.
These implied per-ounce profits have been skyrocketing, leaving gold stocks deeply undervalued relative to their metal. A year ago in Q3โ23, the GDX top 25 reported $622 in unit earnings which soared 94% YoY. Then in Q4โ23, those grew again to $659 per ounce which shot up another 42% YoY. That trend persisted in Q1โ24, with these major gold miners averaging earning $795 per ounce which powered up 35% YoY.
Then all that accelerated dramatically in the spectacular Q2โ24, which I analyzed in depth in a mid-August essay. That quarterโs record average gold price of $2,337 combined with GDX-top-25 AISCs plunging 10.2% YoY to $1,239 catapulted unit earnings to a dazzling record $1,099! That blasted up another 84% YoY. So minersโ last four reported quarters have seen per-ounce profits soar 94%, 42%, 35%, and 84% YoY!
Such explosive profits growth has naturally slammed gold minersโ price-to-earnings ratios dramatically lower, into the teens and even single digits in some cases. With fantastically-bullish fundamentals like this, youโd think traders would be rushing into this high-potential sector. But gold stocks remain mired in apathy, lost in the shadow of this crazy AI stock bubble stealing all the limelight. Yet its days are numbered.
Eventually stock prices always mean revert to some reasonable multiple of underlying corporate earnings. Market-darling AI stocks canโt trade with 60x+ P/Es indefinitely, and good gold stocks canโt remain at sub-15x multiples. Sooner or later some catalyst will spark overdue capital flows to start normalizing all this. It could be the AI stock bubble finally bursting and decisively rolling over, it could prove gold surging even higher.
But maybe the gold miners will stack enough sensational earnings seasons to convince fund managers to return. Their relatively-big buying in this relatively-small sector will drive stock prices way higher, which will eventually fuel greed, euphoria, and maybe even a popular speculative mania. Gold stocks are about to report absolutely-epic Q3 results, their best ever achieved by far! That could prove this sectorโs tipping point.
Q3โ24โs average gold price soared an amazing 28.6% YoY to a new all-time record $2,477! This is utterly stunning considering just a year ago that highwater mark had been $1,978. Goldโs phenomenal prices last quarter were fueled by major buying from gold-futures speculators, central banks around the world, Chinese investors, and a huge surge in Indian gold imports. I could write entire essays discussing each.
But today realize Q3โs record gold levels have been set in stone, they canโt be revised lower like Biden Administration jobs reports. So the only variable driving sector unit profitability is the GDX top 25โs average all-in sustaining costs. Over the past four quarters they have been trending lower on balance, clocking in at $1,304, $1,317, $1,277, and $1,239 per ounce. That averages $1,284, a conservative baseline.
The majority of these elite major gold miners provide and update AISC guidance throughout the year. And many of them are forecasting higher production and thus lower mining costs in H2โ24 compared to H1. Gold mining has massive fixed costs, which growing output spreads across more ounces reducing unit costs. A surprising number of major gold miners continued guiding to considerably-lower costs in Q3 and Q4.
The worldโs largest gold miner and GDXโs biggest component by far with a huge 14.6% weighting is a great example. In Q1 and Q2, Newmont reported AISCs of $1,439 and $1,562 per ounce. That averaged a little over $1,500 in H1. Yet in late July NEM reaffirmed its full-year-2024 AISC guidance at just $1,400 per ounce. Unlike most of its peers, Newmont didnโt even give a range. And its 2024 output was H2-weighted.
Back in late February this super-major forecast 47% of this yearโs production would come in H1, then 53% in H2. That alone is going to force AISCs lower. To hit that $1,400 AISC target for all of 2024, Q3โs and Q4โs would have to average just $1,300! That is sharply lower from Q1โs and Q2โs, and would make for a big improvement. We are talking about H2 AISCs plunging 13%+ from H1 levels, which would be amazing.
While I really doubt NEM will achieve such low Q3 and Q4 AISCs, they will definitely materially improve. And there are plenty of other GDX-top-25 majors with similar much-better-mining-cost forecasts for H2 compared to H1. Collectively these elite gold miners averaged $1,258 AISCs in H1โ24. It seems pretty conservative to imagine them improving 2%ish in this soon-to-be-reported Q3, which would be near $1,230.
We wonโt know what the actual average is until Q3 earnings season ends in mid-November, after which Iโll write another essay fully analyzing those collective results. But if GDX-top-25 AISCs come in around $1,230, subtracted from Q3โs phenomenal $2,477 average gold price that yields implied sector profits of $1,247 per ounce! That would crush Q2โ24โs previous record of $1,099, and skyrocket over 100% YoY!
Youโd sure think a doubling in gold minersโ already-massive profits would impress some fund managers, motivating them to add gold-stock positions. But even if GDX-top-25 Q3 AISCs come in way higher for some reason, profitability is still going to soar. Even if those average AISCs prove much worse up near $1,350, Q3โs unit earnings would still soar 81% YoY to a new record $1,127. Those profits will prove epic.
Crazily due to this AI stock bubble and funds dangerously concentrated in a handful of wildly-overcrowded AI plays, American stock investorsโ overall allocations to gold are effectively zero. Entering October, the S&P 500 stocks collectively commanded a staggering $51,247b market capitalization. Yet the combined holdings of the world-dominant American GLD and IAU gold ETFs were merely worth $106b that same day.
That implies a trivial 0.2% gold allocation, despite goldโs record-shattering year! That should be 5% to 10%, since gold has always been an essential portfolio diversifier. Even if it grows to 1%, gold is heading way higher. And fund managersโ allocations to gold minersโ stocks are similarly-tiny. At some point gold minersโ earnings will grow so fat and rich that their stocks can no longer be ignored, and capital inflows will soar.
While the major gold stocksโ imminent Q3 results are going to be jaw-droppingly awesome, this sector does face a near-term speedbump. Gold stocks leverage gold, and it faces high selloff risks during coming weeks. My essay last week analyzed this in depth. Gold simply blasted too far too fast to extremely-overbought levels driven by heavy gold-futures buying, leaving speculatorsโ positioning extreme.
But despite gold growing really overextended, gold stocks are not since they have lagged their metal so much this year. This chart divides GDX by its own 200-day moving average, creating an overbought-and-oversold indicator I call the Relative GDX. This renders gold-stock moves in constant-percentage terms around a 200dma flattened to horizontal at 1.00x. Over time this rGDX indicator tends to form trading ranges.
The current one based on the last five years of data runs from extremely-oversold levels under 0.75x GDXโs 200dma to extremely-overbought ones over 1.30x. Unlike its metal, GDX still hasnโt yet reached the latter warning levels in this year-long upleg! At the major gold stocksโ latest interim high achieved in late September, the rGDX was merely running 1.249x! Gold stocks donโt need to fully amplify goldโs selloff.
Of course they will to some extent, as they are leveraged plays on the metal they mine. At worst since its latest interim high, gold has pulled back 2.4% as of midweek. GDX did fall 6.8% in that span, making for 2.9x downside leverage on the higher side of that usual 2x-to-3x range. But that ought to moderate since gold stocks remain really undervalued after seriously lagging goldโs powerful advance, as precedent shows.
Goldโs last healthy mid-upleg pullback ran from late May to early June, when it dropped 5.7% rebalancing sentiment. During that span gold bled off excessive greed, GDX only retreated 10.0% making for mere 1.8x downside leverage! Any coming gold-stock downside on another gold pullback should prove relatively-muted as well. The gold stocks never challenged extreme overboughtness, and popular greed never flared.
If gold pulling back forces a gold-stock selloff ahead of or into Q3 earnings, that should prove an excellent buying opportunity. Mid-upleg pullbacks offer the best buy-relatively-low opportunities within ongoing bull-market uplegs. We ratcheted up trailing stop losses on our newsletter gold-stock trades preparing for a retreat, and Iโm researching fundamentally-superior mid-tiers and juniors to buy into as it runs its course...
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Miners still following the ping pong pattern of gold, when a breakout is confirmed, you wont see the connection at the hip for months.
In other words, in fact, they are 10x behind. https://kingworldnews.com/john-hathaway-the-stage-is-set-for-a-big-move-in-gold-and-gold-miners/
$GDX - Be aware of the 'H&S' Up at the Uppr-End of that Bear 'Wedge'...
By: Sahara | October 3, 2024
โข $SPX seemingly range bound between 0.75 and 1.0 std dev. Waiting to see signs of direction.
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$GDX #Miners - Interesting week with last weeks Ominous 'Gravestone' (Or 'Inv Hammer') Candle at the Uppr-BB, Uppr-Parallel & Blue-Buffer...
By: Sahara | September 30, 2024
โข $GDX #Miners - Interesting week with last weeks Ominous 'Gravestone' (Or 'Inv Hammer') Candle at the Uppr-BB, Uppr-Parallel & Blue-Buffer...
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Normally what would be gold investor inflow went to BTC during and after several Halvings, many are stuck either financially or mentally. they know nothing else. The rest of the world, maybe hundreds of million out of the 6 plus Billion not in the west, since its now wealthier then ever before per person excluding the rich and infamous. The world gets it, the west is toast, more accurately post toastie, as in hits the goal post and never the net anymore. the west is fried, beyond all reasoning, stuck in markets and crypto, while the rest of the world will be a part of the transition to real money because fiat is absolutely BK. The dollar is doomed and the US along with central banks around the world, have already begun to transition back to real money. It will be the Great world wide recession or depression, into a new monetary systems based on real money, gold and silver. everything else that makes it will have to have the capability to transfer into real money or it will fade away. US wants civil war or WWIII because they cannot navigate out of the mess they created. like a VP who was dictator over the border, failed over 10 million time, then 40 days before election decides to pretend to secure the border. ITs too late, game over in every way. All crypto that becomes a derivative of gold has a chance, the rest will swell up with moron retail investors then implode with absolute impunity.
Analysts predict that inflows into gold exchange-traded funds, especially from Western investors, are likely to increase in the coming months, providing additional positive momentum to already record-high bullion prices.insert-text-here
Gold Stocks Forge Higher
By: Adam Hamilton | September 27, 2024
The gold minersโ stocks are forging higher, just achieving their best levels in four years. While advancing, their upside progress has certainly been labored. Given goldโs monster upleg and dazzling record highs, gold stocks should be much higher. And their record profits and epic earnings growth sure support way-better stock prices. The main impediment is tradersโ apathetic sector sentiment, but that is starting to shift.
The leading GDX gold-stock index has surged 7.2% at best this month, closing at $41.41 Tuesday. That proved major gold stocksโ highest levels in 3.9 years. And if GDX can best the $44.48 it hit a few months earlier in August 2020, weโd be looking at 11.7-year secular highs! Since early October 2023, this GDX upleg has powered up 59.8%. Thatโs trouncing broader stock markets, with the S&P 500 up 34.5% in that span.
With great performance like that over this past year, youโd think gold stocks would be growing popular. But they really arenโt. Mainstream investors still arenโt the least-bit interested in chasing this sectorโs strong upside momentum. Theyโre still enamored with the AI stock bubble, which continues to steal all the market limelight. And contrarian investors like me who follow gold stocks are pretty disappointed in them.
Gold stocks are ultimately leveraged plays on the metal they mine. The gold-mining business heaps big additional operational, geological, and geopolitical risks on top of gold price trends. So gold stocks really need to outperform gold to justify deploying capital in them. Historically the major-dominated GDX has generally leveraged material gold moves by 2x to 3x. That kind of amplification makes gold stocks worth owning.
Unfortunately theyโve way underperformed long decades of precedent over this past year. GDXโs 59.8% upleg sounds good, but gold itself has enjoyed a monster 46.3% upleg in that timeframe! That means the major gold stocks have only clocked in with 1.3x upside leverage to their metal. At that usual 2x to 3x, this GDX upleg should already be up 93% to 139% given goldโs massive gains! Gold stocks are way behind.
That doesnโt mean they wonโt catch up with gold, which can happen fast. Compared to the vast pools of stock-market capital, this contrarian sector is vanishingly-small. So even tiny shifts in capital flows can catapult gold stocks far higher in short order. During goldโs last 40%+ upleg cresting in August 2020, that last time GDX was higher, GDX had rocketed up 134.1% in only 4.8 months! Gold stocks arenโt out of the race.
After actively trading this high-potential contrarian sector publicly for a quarter-century now, Iโve seen plenty of times where gold stocks were mostly ignored. Sooner or later investors always return, resulting in huge gains. Doublings in under a year arenโt uncommon, gold stocks can really multiply wealth when they are running! Another doubling or more is coming as gold stocks mean revert way higher to reflect gold.
That will be driven by a major bullish sentiment shift, resulting from goldโs massive gains and impressive parade of nominal record highs. The gold minersโ colossal earnings generated at these high gold prices fundamentally justify way-higher stock prices. Before we delve into all that, this chart puts GDX technical action in recent years into perspective. The gold stocksโ latest secular high is marginal, they are forging ahead.
Interestingly despite vexingly lagging gold this past year, gold-stock doublings are still a thing. Since this secular gold bull was born in late September 2022, GDX has powered up 89.3%. That compares to goldโs +64.0% at best in that span, making for modestly-better 1.4x upside leverage. Yet driven by gold-stock sentiment, sector performance can turn on a dime. GDX would only need a couple months to fully catch up.
The dominant driver of gold-stock psychology is how gold is faring. And that is awesome right now, achieving five new record closes in August followed by another seven so far in September! Closing way up near $2,662 Tuesday, such fantastic gold levels were almost unimaginable just one year ago. The longer and higher gold rallies, the more investors and speculators will want to chase it including with gold stocks.
New record highs in particular fuel virtuous circles of buying. The higher gold goes, the more the financial media covers it and the more bullish their coverage gets. That elevates gold and by extension its minersโ stocks onto more investorsโ radars, including fund managers. The more buying they do, the more gold and gold-stock gains mount. That generates more bullish commentary attracting in widening circles of investors...
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Gold CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | September 28, 2024
โข Following futures positions of non-commercials are as of September 24, 2024.
Gold: Currently net long 315.4k, up 5.3k.
Gold rallied another 0.8 percent this week to $2,668/ounce but not before raising a caution flag. It touched $2,697 intraday Thursday before profit-taking began.
Last week, after five sessions of sideways action at $2,610s, gold broke out Friday; this followed a breakout in the prior week at $2,540s-50s after several unsuccessful attempts since mid-August. The metal has experienced a sustained rally from $2,305 this June, including an August breakout at $2,440s-50s after more than three months of sideways action.
This weekโs shooting star candle probably is a warning that gold is ready for a breather. Immediate support lies at $2,610s, followed by $2,540s-50s and $2,440s-50s.
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Breaking out, much much higher soon as some reset on Stoch and RSI. https://www.zerohedge.com/precious-metals/gold-priced-swiss-francs-finally-breaking-out
Goldman Commodity Traders: Gold Buying On Our Desk Has Been Relentless, And Silver Is Starting To Move Too
So, in light of the above, Goldman's commodity team reiterates its "long gold trading recommendation and our price target of $2,700/toz by early 2025" for three reasons:
My comment - They and others are losing control of the gold and silver paper market. Late to the party or CYA announcement to clients. Look here, don't look there.
We believe that the tripling in central bank purchases since mid-2022 on fears about US financial sanctions and US sovereign debt is structural and will continue, reported or unreported.
Fed rate cuts are poised to bring Western capital back into gold ETFs, a component largely absent of the sharp gold rally observed in the last two years. Since ETF holdings only increase gradually as the Fed cuts, this upside is not yet fully priced in.
Gold offers significant hedging value to portfolios against geopolitical shocks including tariffs, Fed subordination risk, debt fears, and recessionary risks. Our analysis suggests an additional upside of 15% in gold prices under a hypothetical rise in financial sanctions equal to the rise seen since 2021 and a similar upside if US CDS spreads widen by 1 standard deviation (13bps) amid rising debt concerns.
https://www.mintstategold.com/investor-education/cat/news/post/goldman-commodity-traders-gold-buying-on-our-desk-has-been-relentless-and-silver-is-starting-to-move-too/
The Last Stage of the Gold and Silver Breakout FINALLY Begins
$GDX #Miners - Tapped all my targets from that Bull Plot. Now has a Bear 'Wedge'...
By: Sahara | September 26, 2024
โข $GDX #Miners - Tapped all my targets from that Bull Plot.
Now has a Bear 'Wedge'...
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small cap miners will most likely way out perform GDX but i like to stick with something i know.
watch the sky, its now clear this it was 1979 over again.
$GOLD MINERS NEWS - $Gold now has a historical breakout vs US CPI. A very bullish chart for precious metals.
$Gold Has Also Broken Out vs CPI
The inflation-adjusted $gold price having a 44-year break out has absolutely massive implications going forwardโฆ
$15,000 GOLD Soon! Prepare for the BIGGEST $Gold & $Silver Rally in 50 Years - John Rubino
Money Sense
John is a veteran in the field, and has sound logic and discussions. not like most on the internet. Although i disagree with his price, is see gold....within 3 years, at 33k.
$15,000 GOLD Soon! Prepare for the BIGGEST Gold & Silver Rally in 50 Years - John Rubino
Money Sense