How High Can Gold Stocks Go?

“How high can gold stocks go?” is the question of the day

Considering that the HUI Gold Bugs index is sitting squarely on the long-held NFTRH target * of 500 (+/-), it’s a question up for debate. Just how high can gold stocks go, anyway?

* Target established sometime after the ‘2’ low was put in and activated for this cycle after ‘4’ was put in.

Of course, nobody has that answer. I could become a legend, touted in the mainstream media one day thusly: “the man who called HUI 500, now has another prediction”, if HUI were to make a major high here. I am just kidding about that, obviously, as I very likely will never be MSM bound because my work is based in what works, not what media can harvest eyeballs with.

But HUI is at a clear resistance area while overbought. That is a concern.

However, a target is just a target (not necessarily a stop sign), and it is now registered. The overbought monthly chart above is about to complete its 6th straight month of gains. The last time it did that was 2003, which preceded a volatile 2-year consolidation. I asked people on X for opinions on what comes next. I am no “influencer” or follow-hound, so the responses are of a limited sample size.

FWIW, I am currently “holding on for dear life” and “glad I’m not a FOMO” after taking a few profits and replanting elsewhere. But I am also preparing for “pause & grind” (ref. the 2004-2005 phase noted above).

That would be a logical outcome for an overbought sector at clear resistance. Another logical outcome would be for a hard pullback if the broader markets, which the miners have been leading, were to finally take a significant bear move. However, what about the “hot knife through butter” contingent?

After 14 years in the wilderness of a brutal bear market and painfully volatile bull market (which technically began in 2016), has not the gold stock sector earned a whopper of a bull? Consider that the macro fundamentals (which are largely beyond the scope of this article, but which I have pounded the table on repeatedly all year) are not degrading (as they started to in 2004, prior to the 2-year consolidation) or completely shot (as they were in 2007, prior to the 2008 crash).

While momentum, as indicated by the Gold Miners Bullish Percent index (BPGDM), is hot, it is a feature of a real bull market. Active bulls have to live with such a contrarian negative. Lord knows stock market bulls have carried that weight more often than not since the beginning of the policy bubble in 2001.

On the flip side of that coin, what on earth is the Sprott Gold & Silver bullion fund doing with a discount to its Net Asset Value (bottom panel)? If you are thinking that the Sprott Gold and Sprott Silver bullion funds may be cannibalizing CEF’s Au/Ag mix, consider that both of those funds are also trading at discounts to NAV.

Either there are too many competing products, more people have decided they want to stack the real “fiz” on their own, or the mainstream have barely even noticed, as they continue to chase Nvidia and the AI hysteria, among other manias.

Let’s close with a daily chart of HUI and three ratios that work well as sector “internals”.

As nominal HUI has steamed upward to target:

• HUI’s ratio to gold – itself in a bear market since 2004 – has broken upward from a base, showing that the gold miners are finally leveraging the macro to positive effect, unlike the negative leverage circa 2004-2024 (yep, 20 years of futility for gold stock bulls). Note that this daily chart shows a bullish base breakout, but longer-term charts show more work to do to establish a firm uptrend.
• HUI’s ratio to the S&P 500 is on the verge of a base breakout of its own. SPX is the last pig, I mean man, I mean policy-bloated market standing in the way of a signal that gold stocks are a winner among also-rans and ‘used to be’s. Again, a sector in the wilderness for 20 years that sees its macro fundamentals in good shape? That’s what you look for in markets, if you’re not too busy chasing Nvidia to da moon.
• Finally, the aspect I find most interesting. The gold miners have led SPX for most of 2025 and are currently on an attempt to break out of a base relative to SPX. This while Gold/SPX has flagged down to test a base breakout of its own. That is potentially quite a bullish prospect. What will mainstream investors think if they see gold once again rising in SPX terms with the miners out-performing? It’s a foreign concept bred by 2 decades of gold stock sector futility. This rhymes with the gold stock “melt-up” scenario.
• The alternate view is that sure, HUI/SPX is leading Gold/SPX. But Gold/SPX can and probably will rise even if most nominal markets are in decline, including precious metals. That could pressure but likely not greatly impair gold stocks. This rhymes with the “pause & grind” scenario.

Bottom Line

The sensible view would be that the gold mining sector is due for a pause or correction.

However, as illustrated above, elements are in place for a potential melt-up stunner as well. HUI/Gold is finally making a bull move (positive leverage), HUI/SPX is on the verge, and all of this is happening while Gold/SPX continues a downward consolidation (bull flag) toward base-breakout support.

If you are a trader and have waited for HUI 500, you trade, take profits and continue to trade any volatility ahead.

If you are a swing trader or hybrid type, you probably take some profits here and re-plant there. That’s the “pause/chop & grind” scenario.

However, there is a third option, which actually has some rationale to it. That option is to strap in, prepare for volatility, but with an open mind toward said “melt-up stunner”. That’s the “holding on for dear life” option.

NFTRH will continue managing all of the above, gauging internals, technicals and fundamentals, to continue having a front seat to any changes in the market’s character. Regardless of the short-term options, longer-term HUI is set to take out its 2011 high in 2025 or 2026 and enter blue sky. “Sooner or later?” is the question.

As a final thought (caveat), the macro fundamentals are good for the counter-cyclical gold mining sector. However, if Trump’s pro-business policies (not to mention his influence on the Fed) start to grip and turn the economic cycle sooner rather than later (our current view is for an interim economic counter-cycle/recession prior to the next inflationary, potential “crack-up” recovery that I believe Trump may be summoning) gold mining fundamentals could take a hit, as per the post-2004 example. That would be a story for another day, since it is future speculation.

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