Gold stock gains mount

The gold miners’ stocks are enjoying mounting gains, with their young upleg continuing to power higher on balance. Their recently-reported Q1 results revealed strong fundamentals, fully justifying better stock prices. The gold stocks have achieved major upside breakouts technically, and will soon trigger a major buy signal. Yet sentiment remains apathetic if not skeptical, so the lion’s share of capital inflows are still coming.

This small contrarian gold-stock sector is in a key transition zone. It has mean reverted sharply higher in recent months, but still hasn’t surged far enough yet to hit most traders’ radars. That is the tipping point when gold-stock buying becomes self-feeding, when higher prices attracting in more capital coalesce into a virtuous circle. Then gold-stock uplegs grow huge as excitement and greed climb back to high levels.

The leading gold-stock benchmark and trading vehicle remains the GDX VanEck Vectors Gold Miners ETF. From early August to early March it was mired in a rare extended correction with gold, which is the dominant primary driver of gold stocks since their earnings leverage its fortunes. But since drooping back to $30.90 on March 1st, GDX has rallied a sizable 28.4% at best in 2.5 months to regain $39.68 in mid-May.