Gold Stocks Priming to Run

The gold miners’ stocks are priming to run, nearing their next major surge higher.  They’ve proven quite resilient this summer through gold’s weakest time of the year seasonally.  They’re about to report their best quarterly results ever by far.  They remain very undervalued relative to prevailing gold prices.  And gold is heading into its strong autumn-rally season.  All this converging ought to fuel increasing gold-stock buying.

Though gold stocks continue to fly under most radars, they’re having a great year.  As of midweek the dominant GDX gold-stock ETF has soared 52.8% year-to-date!  That is amplifying gold’s own huge 27.6% YTD gain at 1.9x, nearing major gold stocks’ historical leverage range to their metal of 2x to 3x.  While this sector tends to weaken in June during gold’s summer doldrums, gold stocks have proven very resilient.

This chart is updated from my latest gold-summer-doldrums essay in late May.  It reveals how gold stocks have behaved through all modern gold-bull-year summers.  The classic HUI gold-stock index replaces GDX here, as the latter hasn’t been around long enough for this secular seasonality research.  But with essentially the same major holdings, these older and newer benchmarks are functionally interchangeable.

To ensure each summer’s gold-stock price action is perfectly comparable, all are indexed to the HUI’s final May closes which are set at 100.  A level of 105 for example indicates gold stocks have rallied 5% from pre-summer levels.  Past gold-stock summers are rendered in yellow and all averaged together in red.  Last year’s action is light-blue, while 2025’s good summer-to-date performance is shown in dark-blue.

Normally the major gold stocks of the HUI and GDX drift lower to sideways in summers’ first-halves into mid-July.  But this year miners surged sharply out of the summer gates as June dawned, and have held those gains since.  Summer-to-date in these modern gold-bull years of 2001 to 2012 and 2016 to 2024, the HUI has averaged just 100.3 indexed.  But so far in this summer of 2025 that average has soared to 106.2!

This is one of gold stocks’ better summer performances in the last quarter-century.  While that would be impressive any year, it is even more so given today’s backdrop.  Because of gold miners’ inherent profits leverage to their metal’s price, their stocks are essentially leveraged plays on gold.  Gold stocks shouldn’t enjoy a strong summer unless sizable gold gains are driving it.  But gold has been consolidating high this year.

Gold exited May at $3,292, and has since averaged $3,345 summer-to-date.  That’s merely 1.6% over its final May close.  But GDX has averaged $52.46, which is 3.6% higher for 2.3x leverage.  Normally when gold is largely drifting in this seasonally-weak span, gold stocks fare worse on mounting apathy and even bearishness.  So seeing them outperform this summer while gold isn’t doing much is quite a show of strength.

That implies gold miners are enjoying bigger-than-usual capital inflows, likely from institutional investors.  Professional fund managers are always studying markets looking for opportunities to buy relatively-low.  But retail investors mostly wait for upside momentum to chase.  They’ve largely forgotten about this high-flying sector since it hasn’t consistently surged since April.  The consolidation since has spawned much apathy.

But professionals’ awareness gold stocks are priming to run is growing.  So they have apparently been gradually building positions ahead of this sector’s next major surge higher.  Despite gold stocks’ big year-to-date advances, they remain very undervalued relative to prevailing gold prices.  Gold miners’ earnings have skyrocketed during gold’s mighty cyclical bull, but gold-stock gains have seriously lagged them so far.

From early October 2023 to mid-June 2025, gold has soared 88.6% higher in one of its biggest cyclical bulls ever!  And remarkably this huge bull run was comprised of a single monster upleg, without any 10%+ corrections!  Historically major gold stocks have again amplified material gold moves by 2x to 3x, which implies GDX soaring 177% to 266% during this span.  Yet anomalously GDX only climbed 110.2% or 1.2x!

That’s dismal gold-stock performance relative to the metal, an extreme anomaly that can’t and won’t last.  Gold miners heap big additional operational, geological, and geopolitical risks on top of gold price trends.  So their returns must be much higher to compensate investors.  During gold’s last 40%+ monster upleg cresting in August 2020 for example, GDX skyrocketed 134.1% to gold’s 40.0% for fantastic 3.4x upside leverage.

Fundamentals all but guarantee similar gold-stock outperformance is coming this time around before gold’s powerful bull gives up its ghost.  After every quarterly earnings season, I analyze the latest results reported by GDX’s top-25 component gold miners.  They’ll be reporting their Q2’25 results from late July to mid-August, so those aren’t released yet.  Gold miners’ earnings will have soared to epic records last quarter.

Comparing how major gold miners fared in Q4’23 when gold’s mighty cyclical bull was born to their last-reported Q1’25 results is very illuminating.  During that original bull-birthing quarter, gold averaged $1,976 on close while the GDX top 25’s all-in sustaining costs averaged $1,296 per ounce.  That made for implied unit profits of $680.  Much-higher gold prices since have radically improved gold miners’ fundamentals.

In Q1’25, average gold prices had blasted up 45.0% to a record $2,866!  Yet the GDX top 25’s AISCs only climbed 7.7% to $1,396.  Gold-mining costs rising far more slowly than gold is the secret to why gold stocks greatly outperform their metal.  Mining costs are largely determined during mine-planning stages when engineers decide which ores to excavate and how to process them, involving fixed-capacity plants.

While mines are very capital-intensive to construct, once built their processing throughput doesn’t vary much quarter after quarter.  Running those operations requires similar ongoing levels of infrastructure, equipment, and employees regardless of prevailing gold prices.  The main variable is the ore grades run through plants, which changes within gold deposits.  But the tonnage of ores fed through are mostly constant.

Q1’25’s average gold price less GDX-top-25 average AISCs yielded sector implied unit profits of $1,470 per ounce.  Not only was that an all-time record, but it soared 116.2% from Q4’23 levels when gold’s bull was born!  That amplified the average gold price’s 45.0% gain by 2.6x, right in the middle of major gold miners’ usual 2x-to-3x stock-price-leverage range!  Gold stocks’ outperformance is fully fundamentally-justified.

And soaring gold-mining profits are nothing new.  During the last seven reported quarters ending Q1’25, the GDX top 25’s implied unit earnings have skyrocketed 87%, 47%, 31%, 84%, 74%, 78%, and 90% YoY!  This imminent Q2’25 earnings season is going to add to that phenomenal best-in-stock-markets streak of huge earnings growth.  Gold averaged another dazzling all-time-record $3,285 during this last quarter!

Several weeks ago I wrote an essay on gold miners stacking records, which digs more deeply into all of this.  That explained the studied reasoning behind my estimate that Q2’25 GDX-top-25 AISCs will shake out around a $1,375 average.  That would make for another massive 74%-YoY jump to an astounding record $1,910 per-ounce earnings!  Gold stocks still need to soar to reflect these fantastic fundamentals.

Any fund managers upping their gold-stock allocations likely understand how incredibly well these miners are faring.  They have the resources and staff to do similar research into gold miners’ fundamentals.  But the vast majority of retail investors remain oblivious.  They don’t have the interest, time, or expertise to stay abreast of miners’ quarterly results.  That leaves them forgetting about gold stocks until they resume surging.

While chasing upside momentum is how stock markets work, that’s unfortunate.  The greatest gains are won by buying in relatively-low then later selling relatively-high.  Those low entries require sectors to be out-of-favor.  So by not putting in some effort staying informed, retail investors doom themselves to buying relatively-high after major surges are already well underway.  Arriving late retards achievable gains.

While much expertise and effort are required to analyze gold miners’ quarterlies, there’s a simply proxy for gold-miner valuations that anyone can track.  It looks at the ratio between GDX and the dominant GLD gold ETF.  Dividing their closing prices reveals gold-stock levels relative to gold’s, which can be charted over time offering much insight.  This chart overlays that GDX/GLD Ratio in blue on the raw GDX itself in red.

GDX’s 110.2% gains at best so far in gold’s mighty cyclical bull sound good, and are evident in its strong 2025 surge.  My first essay published this year as January dawned explained why 2025 would finally be gold stocks’ revaluation year.  That thesis has certainly proven right through this year’s first-half, but gold stocks have lots of rallying left to go.  Relative to gold, their advance effectively stalled out exactly a year ago.

In the early months of gold’s monster upleg, gold stocks fell way behind their metal.  Back in late 2023 and early 2024, gold’s early gains were overshadowed by the AI stock bubble stealing all the limelight.  So with surging gold mostly ignored, gold stocks languished.  The GGR was running 0.156x when gold’s bull was born in early October 2023, then plunged to a deep 4.0-year low of 0.137x in late February 2024!

That was an extreme stock-panic-grade anomaly, wildly unsustainable which I warned about at the time.  That very week I concluded my essay with “Excessive selling has slammed GDX way back down to early-October levels when today’s gold upleg was born.  Yet that makes zero sense fundamentally with gold remaining about 12% higher. ... [Gold stocks] are due to soon mean revert sharply higher with gold.”

Indeed gold stocks soon started soaring, mean reverting hard.  Over the next 4.6 months into mid-July 2024, GDX blasted up 52.3% outperforming enough to drive the GGR back up to 0.172x!  But ever since then, upper resistance for this leading gold-stock ETF has stuck around 0.17x the dominant gold one.  All attempts for an upside breakout above that soon failed in the next several months, gold stocks largely stalled.

But rather amazingly considering gold stocks’ typical listlessness during gold’s summer doldrums, GDX is priming for a major GGR breakout.  Through all of June and July to midweek, the GGR has averaged 0.170x which is right at its resistance during this mighty gold bull!  It won’t take much buying to push gold stocks higher faster than gold, achieving the GGR’s first new higher territory in a year.  That breakout is nearing.

Since gold stocks have seriously underperformed gold throughout its mighty cyclical bull, they have lots of room to run much higher.  During gold’s 88.6% monster upleg into mid-June, the GGR merely averaged 0.157x.  To put this in perspective, gold’s last two 40%+ monster uplegs both crested in 2020 averaging 41.4% gains over 11.7 months.  While great, those were less than half the size of today’s goliath specimen.

Yet during their entire lifespans, the GGR averaged 0.188x!  That’s 19.7% higher than during today’s bull, and merely an average.  Half the time during those previous gold bulls, the GGR was higher.  And the best GGR levels seen during gold bulls happen as they are maturing.  That’s when gold stocks really soar as retail investors’ greed mounts and they increasingly flood in to chase this sector’s strong upside momentum.

As investors have been skeptical on gold stocks for gold’s entire mighty cyclical bull, the last time their greed really flared was in mid-summer 2020 as gold’s last monster upleg crested.  During the month surrounding its topping in late July and early August, the GGR averaged 0.230x!  It will almost certainly return to those levels as retail investors resume chasing, and likely go higher since gold’s upleg is so epic.

At current gold prices, a 0.230x GGR would catapult GDX up near $71.  That’s 37% higher than today’s levels, and would extend major gold stocks’ total run during gold’s mighty cyclical bull to 174%.  That is still just the bottom of their usual 2x-to-3x amplification range, which again implies GDX soaring by 177% to 266% based on gold’s gains so far.  And this is conservative since gold itself is likely heading much higher.

I analyzed why in my essay last week on gold chasing mounting, revealing American stock investors’ differential gold-ETF-share buying really accelerating.  Despite the still-festering AI stock bubble, they are starting to realize it is prudent to diversify their mega-cap-tech-dominated portfolios with gold.  And this is only starting, as American stock investors’ implied portfolio allocation to gold is only running a trivial 0.3%!

American gold-futures speculators’ overall positioning also remains quite bullish for gold, they have lots of room to buy hyper-leveraged longs accelerating gold’s upside.  While no one yet knows how high gold will run, $4,000 is the next major psychological milestone.  That’s just 19.5% above midweek levels, not much of a stretch.  That would drive GLD shares up near $368, implying GDX challenging $85 near a 0.230x GGR.

That would grow GDX’s total gold-bull gains to 227%, more than doubling the 110% at best so far!  And if gold continues powering higher on balance up near $4,000, odds are that would spark frenzied gold-stock buying either resembling or actually being a popular speculative mania.  In that case the GGR would soar way higher.  There’s lots of precedent for that, recent years’ GGR levels have been really low relative to history.

Ever since GDX was born in mid-May 2006, the GGR has actually averaged 0.275x.  At GDX’s all-time closing high of $66.63 seen way back in September 2011, the GGR was running 0.366x.  And its record is way up at 0.664x in early September 2006.  With prevailing gold prices rising so radically since then, it’ll never return to those heights.  But a 0.300x-ish GGR seems quite probable when gold stocks’ popularity peaks.

Plug that into $4,000 gold, and that yields a potential GDX target over $110!  Gold miners’ massive and consistent earnings growth certainly supports way-higher stock prices.  And these companies soon reporting their best quarter ever by far in coming weeks should really help build awareness of their epic fundamentals.  So gold stocks are really priming to run again, which should start soon if gold breaks out.

Since soaring to crazy-overbought extremes in mid-April, gold has been mired in a high consolidation in recent months to rebalance sentiment.  Showing great relative strength compared to correcting, gold has meandered in a range from mid-May’s $3,179 on the lower end to mid-June’s latest record of $3,431.  A decisive upside breakout 1%+ above that is only another 3.5% higher from mid-week levels, an easy layup!

Big Indian buying usually drives gold’s strong autumn rally, which has averaged good 5.2% gains in these same modern gold-bull years.  That starts with Indian farmers buying gold after harvests, then continues with Indian brides’ families buying extensive gold jewelry for their daughters’ weddings.  That along with American-stock-investor and American-gold-futures-speculator buying makes a gold breakout very likely.

We’ve been preparing for this by refilling our newsletter trading books with great fundamentally-superior mid-tier and junior gold stocks over this past month or so.  They well outperform the majors during gold bulls, better able to consistently grow their production from lower bases often at lower mining costs.  After a quarter-century-plus intensely studying and actively trading smaller gold stocks, we’ve achieved much success.

In the first half of 2025, we realized 34 mostly-gold-stock trades in our newsletters averaging nice +40.7% annualized gains.  Much-bigger ones are coming as gold stocks resume powering higher.  Last year we realized 84 stock trades averaging annualized realized gains of +43.1%.  That utterly trounced GDX, which terribly lagged gold only rallying 9.4% in 2024!  Gold stocks’ mid-summer drift is a good time to add positions.

Successful trading demands always staying informed on markets, to understand opportunities as they arise.  We can help!  For decades we’ve published popular weekly and monthly newsletters focused on contrarian speculation and investment.  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.

Our holistic integrated contrarian approach has proven very successful, and you can reap the benefits for only $10 an issue.  We extensively research gold and silver miners to find cheap fundamentally-superior mid-tiers and juniors with outsized upside potential.  Sign up for free e-mail notifications when we publish new content.  Even better, subscribe today to our acclaimed newsletters and start growing smarter and richer!

The bottom line is gold miners’ stocks are priming to run, readying to resume powering higher with their metal.  Despite gold’s weak summer-doldrums seasonals, gold stocks have enjoyed a stronger summer.  It looks like fund managers have been buying, recognizing miners’ low valuations relative to prevailing gold prices.  And these companies are on the verge of reporting another quarter with epic record results.

Q2’25 will prove gold miners’ eighth quarter in a row achieving enormous earnings growth.  And gold itself is nearing a major upside breakout extending its mighty cyclical bull.  American stock investors are finally starting to chase it, and have vast room to buy with next-to-zero portfolio allocations.  And gold’s usual strong autumn-rally season driven by outsized Indian demand is getting underway.  So buy gold stocks soon.

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