A Special Gold Market Observation

Technical Analyst & Editor
September 3, 2022

The past few months have been brutal for gold stocks, as relentless selling has driven prices down to bargain levels. How bad is it?

It is bad.

But it is also good.

Lets look at the top three mining companies:

NEM – the largest gold mining company has dropped 50% in just four months, one cannot help but feel extremely bearish at this point.

But don’t.

Anytime when a sound and solid company in any sector takes a 50% haircut, it is time to buy, not sell.

Barrick gold has also dropped 50% since topping two years ago.

Notice the previous correction from 2016 to 2018 also lost about 50%.

AEM – has also lost 50% from two years ago.

Previous correction from 2016 to 2018 lost 45%.

$HUI – our bench mark for gold stocks, is currently sitting at a 50% loss from the 2020 top. Previous correction from 2016 to 2018 also lost 50%.

GDX – sitting at a 45% loss from the 2020 top.

Previous correction from 2016 to 2018 also lost 45%.

Summary

Since gold stocks reaching a major bottom in 2015, there’s been two corrections.

Each correction has a duration of exactly two years, except for NEM.

Each correction has resulted in a 45 to 50% loss in the three major companies, the $HUI, and also GDX.

Folks, these top gold producing companies are not meme stocks, at 50% discount, is it time to sell, or time to buy?

You make the call.

Disclosure

We do not own any of these company stocks and have no affiliation.

We do not offer predictions or forecasts for the markets. What you see here is our simple trading model which provides us the signals and set ups to be either long, short, or in cash at any given time. Entry points and stops are provided in real time to subscribers, therefore, this update may not reflect our current positions in the markets. Trade at your own discretion.

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Jack Chan is the editor of Simply Profits, established in 2006. Chan bought his first mining stock, Hoko Exploration, in 1979, and has been active in the markets for the past 37 years. Technical analysis has helped him filter out the noise and focus on the when, and leave the why to the fundamental analysts. His proprietary trading models have enabled him to identify the NASDAQ top in 2000, the new gold bull market in 2001, the stock market top in 2007, and the US dollar bottom in 2011.


The term “carat” comes from “carob seed,” which was standard for weighing small quantities in the Middle East.
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