🚀Will Q2 earnings give the GDX the fuel to rocket?Gold mining stocks have a reputation on promising to deliver big but failing (see 2009-2011).
I’ve been following the GDX since 2016 when I first started buying gold miners, and up until 2020, nothing really happened.
The miners were in a bear market for 8 years and could not breach the $30 resistance, until April 2020.
Does this signal the start of a new bull market, or will the gods have their way and bring us hodlers back to reality?
To get this party started, we will need the GDX to clear $37 decisively, we did hit that area in May but sharply pulled back to the $32 area.
Until we break the $37, we could expect to range between $37-$30.
What will cause the GDX to move higher?
The only thing we can expect to move the GDX higher is the price of gold. if gold can stay above $1700, and oil prices maintain their current price levels for a few more months, the fundamentals for gold miners will look even better.
Oil is a major cost of production for miners, so cheap oil means more profits!
It will be interesting to see their Q2 earnings, if they can impress with earnings when most other sectors are going to show slow growth, that could build buying momentum and attract new money.
If gold prices break to the downside, that will most likely send GDX below $30 and result in a fake-out to what we are seeing.
Looking at the RSI, we can see that momentum is building and even touched the oversold. To me this is a good indicator of a new bull market forming, but I'd like another confirmation in breaking the $37 price.
I don’t see fresh money coming into this sector as we do with Tech stocks, retail investors want to hold stocks that are sexy and gold miners aren’t that.
For that reason, we will need to rely on gold staying above $1,700, good earnings in Q2 and cheap oil.
I have posted my macro views on gold, Bitcoin and the S&P500 this month, please take a look at my trading ideas and give me a follow. My goal is to provide macro views on marketing taking into consideration market news, not solely relying on TA.
