Gold Stocks’ Autumn Rally 6

Gold-stock seasonals are certainly very favorable in these next couple months. Late summers heading into August before gold’s and gold stocks’ autumn rallies usually accelerate offer an excellent seasonal buying opportunity. While not quite as good as the earlier summer-doldrums lows, late summers are just before gold stocks transition into their seasonally strong autumns, winters, and springs. Those enjoy major gains.

That being said, seasonality reveals mere tendencies. The primary drivers of gold and its miners’ stocks are sentiment, technicals, and fundamentals. Seasonality reflects how these average out across calendar years over long spans, but they can easily override seasonals in any given year. But this year’s autumn-rally setup still looks really bullish, partially because of that Fed-gold-futures purge and mean reversion higher.

On average at their autumn-rally topping in late September, the major gold stocks of both the HUI and GDX have powered up 27.2% year-to-date in these modern-gold-bull years! But thanks to mid-June’s hawkish-Fed-dots scare, as of this week GDX is still down 5.1% YTD. That is largely the result of that post-FOMC plunge, as in mid-May GDX was tracking up 10.2% this year compared to a +12.0% seasonal average.

To mean revert back up to those average 27% YTD gains by the end of today’s autumn rally, GDX would have to soar to $45.82. That’s another 34% higher than this week’s levels, big potential upside well worth trading. With the major gold stocks’ typical 2x-to-3x leverage to gold, it would only need to power 11% to 17% higher to fuel a full gold-stock seasonal mean reversion. These relatively modest gains are totally doable.

In gold-stock terms, that would extend GDX’s total upleg since its last correction bottomed in early March to 48.3%. The first four uplegs of this gold-stock bull averaged massive gains of 99.2% over 7.6 months each! So seeing this battered sector mean revert back up to seasonal norms in the next couple months of this autumn-rally span isn’t a stretch. All it would take is gold normalizing after that Fed-rate-hike-scare purge.

And this leading alternative investment’s bullish backdrop certainly favors that. Late-summer Indian gold demand is likely to be bigger than usual on catch-up buying. Speculators’ gold-futures positioning is still very bullish for gold after their violent selling purge on that Fed-rate-hike scare. And investors haven’t fled gold on that anomalous weakness, so they’ll likely chase coming upside momentum amplifying gold’s gains.

While we took our lumps on gold-stock stoppings on that post-FOMC gold-futures puking, we redeployed in fundamentally superior mid-tier and junior gold miners to keep our newsletter trading books full. With gold stocks battered down to really oversold levels relative to GDX’s 200-day moving average and really undervalued levels compared to gold, their upside potential in the rest of this autumn rally looks amazing.

At Zeal we walk the contrarian walk, buying low when few others are willing before later selling high when few others can. We overcome popular greed and fear by diligently studying market cycles. We trade on time-tested indicators derived from technical, sentimental, and fundamental research. That has already led to realized gains in this current young upleg as high as +51.5% on our recent newsletter stock trades!

To multiply your wealth trading high-potential gold stocks, you need to stay informed about what’s going on in this sector. Staying subscribed to our popular and affordable weekly and monthly newsletters is a great way. They draw on my vast experience, knowledge, wisdom, and ongoing research to explain what’s going on in the markets, why, and how to trade them with specific stocks. Subscribe today while this gold-stock upleg remains young! Our recently-reformatted newsletters have expanded individual-stock analysis

The bottom line is gold and gold stocks are entering their strong season, starting with their autumn rally mostly in August and September. That is normally fueled by Asian seasonal gold demand ramping back up. But this year’s setup is much more bullish than usual. Gold-futures speculators need to do big buying to normalize their positioning after their violent exodus in the wake of mid-June’s distant-future-rate-hikes scare.

And while that anomalous event left gold investment demand anemic this summer, it will likely ramp up fast as gold mean reverts higher. Investors love chasing gains to ride momentum, which amplifies gold’s upside. Gold portfolio allocations should soar too on the raging inflation unleashed by the Fed nearly doubling the money supply since March 2020’s stock panic. This is a great setup for a big gold-stock autumn rally.

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