So we have talked a lot about the sector funda and macro funda which, with stocks and commodities out performing gold and long-term interest rates rising with inflation, are not good. We have also looked at an inkling of what will be needed to reverse that.
But since other men (and of course ladies) who stare at charts manage only by technicals, we can take a big picture review of the situation using nothing but a GDX monthly chart. It is just so simple as to be stupidly simple, which is why I like these monthly views (ref. the HUI monthly we usually stare at).
GDX monthly says that should the fundamentals come in line then this thing is set up to run to around 55 (HUI’s next target is the oft-noted 500 area). Should the fundamentals not come in line it’s still a technical bounce that began off of a very bleak sentiment backdrop and it is breaking the Handle so far in May. Just an FYI from another angle.
To review for those with questions, why do I even participate with gold stocks when the fundamentals stink? Because a) sentiment, b) technicals and c) most importantly, they are counter to the high risk cyclical world right now. It doesn’t mean that they will not get dinged when broad markets do, but it does mean that will be the time that gold mining fundamentals get another positive infusion.