The gold sector hit an important low last Tuesday. Conditions are now set up for a gold stock rally for at least the next few weeks.
Of course, it’s hard to be bullish on gold stocks when the sector has done nothing but fall while the rest of the stock market has been hitting new highs almost daily.
So, no one can blame you for being skeptical of an impending gold stock rally. But think about this… Do you remember how retail stocks looked back in late October?
The retail sector was hated by nearly every analyst on Wall Street. The financial television talking heads didn’t have anything good to say. And while stocks like Macy’s (M), Dick’s Sporting Goods (DKS), and Bed Bath & Beyond (BBBY) were trading at historically low valuations and paying historically high dividends, nobody was willing to buy them.
That was right about the time Skechers (SKX) reported better-than-expected earnings. The stock popped 40% higher in one day. And I suggested the retail pendulum was starting to swing the other way.
Look at what’s happened to the retail sector since then…
The VanEck Vectors Retail ETF (RTH) is 13% higher today than it was two months ago.
Why is this important to gold stock investors? Because today, the gold sector looks just like the retail sector looked back in October.
In other words… the gold stock pendulum is starting to turn.
Think about it…
The mining sector is the worst-performing group in the entire stock market. It’s hated by nearly every analyst on Wall Street. The financial television talking heads actually laugh at the thought of buying gold stocks. Investor sentiment is about as bearish as I’ve seen it since the bottom of the gold stock bear market back in December of 2015.
Heck, I’ve actually received feedback from more than a few longtime gold bugs who have recently jumped ship in favor of trading bitcoin and other cryptocurrencies.
To me… this feels like a bottom for the gold sector. Or, if it’s not the exact bottom, then it’s pretty darn close to it.
I like the odds of owning gold stocks here. The risk/reward setups look good. The timing looks good. And, from a contrarian point of view, it’s hard to find a more contrarian trade than buying gold stocks.
Best regards and good trading,
P.S. Smart investors should see nice gains from the gold stock rally I see coming. But my Delta Report subscribers will do even better with the low-risk, short-term option plays I dig up week after week.
If you’d like to learn a bit more about a subscription to the Delta Report… and how you can use it to book multiples on the gains traditional investors could soon see… click here.
Today, a mixed mailbag – everything from junk bond analysis to cashing out of cryptocurrencies…
Good morning Jeff, how are you? I’m a new subscriber as of last week. I look forward to a reversal of fortune learning from you. I enjoyed your first video; plain, simple, and understandable. Thank you.
– Dave S.
I’m not one to usually take up an argument but this is the second time I’ve seen in your user feedback someone stating bitcoin cannot be converted to cash. This is an entirely false statement.
Google it for yourself – numerous trusted outlets for converting it to cash and it’s actually pretty simple. I’ve done it numerous times. I sell my bitcoin on the Coinbase exchange and cash is deposited into my bank account. Another option is the Abra exchange.
I guess I’ve become a little emotional over the 23,000% return I’ve obtained on one of my holdings and the 2,000% return on my overall crypto portfolio in 18 months, even with taking CASH gains along the way. Is it a bubble – absolutely, but I’ve already taken out my initial investment so I’m taking a “free ride” as Doug Casey likes to say and really enjoying the view!
– Carlton L.
You keep looking at the HYG price action relative to the moving averages. I’m going to suggest an alternative view.
To me, it looks as though HYG is forming an ugly head-and-shoulders reversal pattern with a rising neckline. The left shoulder is in and so is the head. Now we are building the right shoulder and with the rising neckline the possibility exists that HYG could break the neckline in a couple of months.
If so, the downside would take HYG back to the March/April lows of this year and be a pretty good correction for the market but not the start of a bear market.
– Harry C.
As always, feel free to send in your past trading stories, questions, or suggestions right here.