GDX: Gold Has Reached A Peak Unless The Federal Reserve Makes A Dovish Pivot
Gold's recent surge is driven by Chinese demand and concerns about monetary stability, but its value is extreme compared to Treasury rates amid quantitative tightening. GDX has declined 14% since September, highlighting gold miners' underperformance compared to direct gold investments due to high production costs and geopolitical risks. Lower oil prices may alleviate cost growth for gold miners, but due to inflation and instability, emerging market operations remain risky and often with less profit growth.
Gold Prices Hit Record Highs: Is It Time to Buy or Take Profits?
The price of gold has reached a fever pitch, breaking its record price almost forty times this year. Gold's most recent record highs saw the precious metal soaring to over $2,750 per ounce.
GDX: Too Late To Chase This Rally In Gold Miners
The rally in gold and gold miners, particularly the VanEck Gold Miners ETF, looks exhausted and may be due for a breather. The GDX ETF is highly concentrated, with Newmont Corporation making up 15% and the top five stocks comprising 44% of the fund. Momentum indicators for GDX and gold suggest potential intermediate tops, with RSI and PPO showing signs of weakening.
GDX: Gold Miner Profits To Surge 70%, But Rally May Slow
Since 2020, I've maintained a generally bullish stance on gold and silver, which I view as key hedges against growing systemic monetary system risks. These risks have escalated this year due to the recent devaluation of the Chinese Yuan and China's extreme economic measures, which have encouraged its population to buy gold and avoid real estate. Gold may be in a bubble today due to excess demand from China. However, its price is reasonable if the Federal Reserve makes a significant recessionary dovish pivot.
As Gold Hits New Highs, GDX Shines As A Long-Term Play
The VanEck Gold Miners ETF is up 24% YTD, driven by rising gold prices due to geopolitical tensions, central bank buying, and falling interest rates. Central banks' increased gold purchases, geopolitical instability, and potential interest rate cuts create a favorable environment for sustained gold price increases. Investing in GDX offers exposure to gold miners, which can amplify profits as gold prices rise, providing diversification and reduced risk.
Why We Went For The Quick Profit In Gold Stocks
We've been trying both defensive and growth areas in this market. Here's how we handled a trade in gold miners.
Gold Miners (GDX) Rally As Gold Trades Over $2500 per Ounce
Hedge funds are the most bearish on commodities prices in at least 13 years as fears of a deeper economic slowdown cast doubts on demand for everything from crude oil to metals and grains, according to a report by Bloomberg Meanwhile, WTI crude oil traded above $79 price per barrel.
GDX: Better Off With Gold
GDX performance has lagged behind the price of Gold. GDX has also underperformed its top holdings. The current portfolio has a consensus upside potential of 12% and is valued at 10x PE or 0.4 PEG.
GDX: Multiples And Margins Tell Us Something Important
GDX has underperformed the S&P 500, but there are important caveats when judging short-term performance. Gold miners margins are now in a very good position to improve through the rest of 2024. Topline growth is also expected to remain high, while valuations do not seem to reflect that.
Gold Miners Could Be Positioned for Long-Term Gains
For much of gold's gains earlier this year, miners have lagged. But that scenario has changed in earnest.
GDX: The Market Remains Skeptical, Even With Gold At Record Highs
The VanEck Gold Miners ETF has outperformed the S&P 500, but performance relative to the price of gold is not up to par. After years of increasing costs, it appears that in 2024 we could finally see certain cost items coming under control. Although the overall risk for equities is now quite high, the GDX ETF is in a good position to outperform both the S&P 500 and the GLD.
GDX: Several Factors Make This Gold Miners ETF A Buy Right Now
Central Banks have stepped up buying gold ever since the invasion of Ukraine. Central Banks move slowly, but are unlikely to revert course once they're going. China could be in the early stages of recovery from an economic downturn.
