Gold’s chart is looking good. It is likely getting a boost by the prospects of low interest rates. No surprise, the Gold Price Is Likely To Continue Its Perfect Uptrend. Our gold price forecast for 2021 may even hit already this year. What does this mean to gold miners, as they got crushed on Feb 28th, 2020?
Gold miners are in a very special situation right now. These are the dynamics at work in the gold mining space:
- Gold price looks great, as per its chart.
- Fundamentally, gold price has good prospects because of a low interest rate environment.
- Stock markets in general are weak, and hanging on a cliff right now. Another decline is possible, but stabilization is possible as well, hard to forecast the very near term.
- Gold miners are cheap relative to the gold price: the gold price has been rising faster lately than miners.
- The gold mining chart is now completing an 8 year reversal pattern. Right at a time when gold miners are coming out of this reversal they are attempting to break out, followed by an unusual hit (last week) and a recovery.
In other words gold mining stocks now deserve special attention. They are in a now-or-never area.
The close up chart of a longer term chart is exclusive to members of our Momentum Investing service is embedded below. Note how recent volatility (breakout attempt / mini crash / recovery) is now setting the stage for the next big trend.
Interestingly there are 2 outcomes, and both are chart-wise equal: a big rally (green channel) or decline (red channel). Any of these 2 outcomes are confirmed once confirmed, not earlier. Sounds simple, it really is simple.
We need to wait a few more weeks.
Why do we believe a rally is in the cards, and give this a higher probability than a decline? Because of the gold price prospects, in a fundamentally gold friendly environment.
Ultimately gold miners have to catch up. They may decide otherwise, but the most likely path for 2020 and 2021 is higher especially if gold continues to rise closer to all-time highs.
How exactly do we play the gold market? Which gold mining stocks will do well? We did explain our viewpoint to the members of our Momentum Investing service. In the Momentum Investing weekend editions of Feb 22nd and March 1st we hinted at the best possible gold mining plays for long term portfolios. Find out our tips by signing up, and looking up the 2 alerts in our alerts archive session.
