Loading ...The bottom line is gold stocks are already recovering. Their recent forced capitulations were extreme anomalies that aren’t sustainable. Cascading stop-loss selling battered gold-stock prices to exceedingly-low levels that are fundamentally absurd. The gold miners’ stocks must be bid much higher to reflect their underlying earnings in today’s gold-price environment. That portends an inevitable mean-reversion rally.
And it should overshoot dramatically as gold itself powers much higher. Gold suffered extreme selling in recent months from gold-futures speculators and GLD investors. The former will soon be forced to cover their still-near-record gold-futures shorts, while the latter will buy as gold rebounds and the stock markets weaken.