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VanEck Vectors Gold Miners ETF Could Be Poised To Break Out Of Downward Trend Thanks To Fundamentals And Sentiment

Rick Pendergraft profile picture
Rick Pendergraft


  • Gold mining stocks have seen surprising earnings and revenue growth in the last few quarters.
  • Despite the surprising growth rates, the mining stocks have been trending lower.
  • The VanEck Vectors Gold Miners ETF has been moving lower and a downward sloped trend channel has formed.
  • Bullish sentiment toward gold has been falling and could be reaching a key level.
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nugget gold
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Using sentiment indicators as part of your analysis process is partly art and partly science, at least that’s how I fell. When you look at the various sentiment indicators, you have to keep in mind what the underlying fundamentals are telling you about

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This article was written by

Rick Pendergraft profile picture
Rick Pendergraft is a Senior Editor on the Opinion & Analysis team at Seeking Alpha. Prior to joining Seeking Alpha, he studied, traded, analyzed, and wrote about the investment markets for over 30 years. He has worked for some of the largest financial publishers in the world and he has been quoted in the Wall Street Journal, USA Today, the New York Times and the Washington Post. In addition, he has been interviewed on Bloomberg, CNBC and Fox Business News. After starting college as an education major, wanting to teach economics, Rick eventually changed to majoring in Economics and received a Bachelor of Science in Economics from Wright State University. His desire to inform and educate people is at the heart of his writing.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (25)

DanShirey profile picture
FNV and WPM aren’t gold miners. They are royalty / streaming companies.
Rick Pendergraft profile picture
That may be the case, but they are still two of the top 10 holdings in the GDX.
panzer profile picture
gonna try and follow the advice of this excellent and yet simple article and the strategy.....Hoping for a move lower, gonna use the author's chart and his advice to buy gdx at 31, which would mean a double bottom.....He has a plan which is clean and supported by his view of the fundamentals......1. companies are making lots of money, 2. everything else is bloated, 3. inflation has got to show up here and be recognized at some point, 4. Looks like we just today had a downturn in the gdx, as he predicted, 5. I can see his double bottom happening. ....general enthusasium for equity is off the charts, with "insane" PEs and there are gonna be a lot of dissappointing earnings, and 6. The Fed is in a catch 22 and they have only one option to print....7. Gold equities should scream higher and finally after this last move lower, break the author's channel to the upside.
7422981 profile picture
Now that the bond auction(10Y) has passed, GLD should be worth a long position. Some of the miners could be as well, but only select ones have upside while others may still remain soft for a while.
@7422981 Many of GLD's components are making $700-800/oz. margins at current gold prices. Any increase in the price of gold, and it looks to be bottoming, will be frosting on the cake. I own@$34.11 and will be doubling my position on each 2.5% drop from there. In case you have not noticed the crazies are now running the country!!
7422981 profile picture
@jack20 Most of the miners are doing really well, profit and balance sheets are in the best shape ever for many. But, the money flow just isn't going into the commodity or the stocks. The metal ought to rebound in the next day or so, but the stocks are somewhat bifurcated, some have held their recent gains fairly well while other have not done so..... Doesn't seem to follow any pattern I can get a handle on.

Anyway, the metal should bounce here shortly, every breakout usually carries with it some kind of retest of the breakout, so that implies lower for many of the stocks in the GDX/GDXJ.
@7422981 Agree. I like to buy a dead market after a drop, and if my timing is off and it falls further I buy more. Right now the speculators have plenty of toys to play with. Bit coins, etc. What is the old market saw "Never short a dull market." I think that is what we have right now.
There is not a lot of “fear” in the market gold might be seen as cheap. But I’m not on the same page on a fundamentals level if we have a really new trajectory
Steven Jon Kaplan profile picture
Rick-- I very much appreciate your balanced and detailed analysis. Thank you.
7422981 profile picture
This article comes way too late in this move, you act on this, you will probably do alright, but you missed out on a lot of the gains. The breakout in Gold(metal) and the miners actually came 10 days ago, buying right now will do fine longer term(weeks) but you actually could suffer some paper losses first in GDX or select miners. Check my posting history over the past 2-3 weeks, you would have done much better recognizing this move when the breakout was in it's initial stages. On Friday(CNBC Options action), the technician Carter Worth made the same recommendation....long GLD/GDX. By the time he gets around to it and SA articles are written, you are apt to be pretty late in your position entry.
GDX will move higher from here.
Good data and commentary.
Jon12483 profile picture
Gold will rally hard when the pyramid scheme bitcoin bubble pops.
I have a complete opposite opinion oF your take!!!
I expect that we COULD see a 200$ up move from here!
Reason being that gold could be catching up with the up mood of the
stock market...
BUT, after that, watch out below...1450 and possibly 1200.
Again, it is all about the fear in the stock market while it is in correction/crash mode...
I have been saying by the end of April but it looks like I was WRONG/early with the peak of the stock market... By the end of May looks more like it.
GDX target 40, snp 4400, oil 70.
For these targets to be reached by the end of April, it is going to be a steeper parabolic rise than I expected...

To be honest, I have some gold stocks and I have been waiting to have a combination of a/ good drilling results, b/ higher gold price, c/ a stock market making higher highs...
I would rather own oil stocks than gold stocks...
I have had it with gold stocks dilutions and the inevitable cutbacks...
At least with oil stocks, while they ALL have a ton of debt, if they can survive the end of the year, they are going to make a ton of money come '22: IF THEY DON'T HEDGE!!!
@xaghra You have read my mind :)?
Seng Hong Teoh profile picture
GDX is hard to read. Staring at the price charts, my gut thinks we may have seen bottom already but it could still dip below $35 since inside the downtrend channel but may not make new lows. So I am selling Puts / Bull Put Spreads to own this between $30-$33.5 levels patiently accumulating. I don’t think it is ready to run up fast yet, but if I am wrong at least I got some option premiums. If it falls, happy to own the underlying.
Have not owned a gold stock for at least 15 years but something made me do it this morning. Bought the GDX right after the opening@$34.11. Hope this article works out. If it goes lower I will buy more. You just cannot under worry about the crazy tax&spend policies floating around DC! These guys are fully capable of throwing the economy into a recession!
Carter Worth on CNBC's Final Call tonight recommended $GDX.
ruber-rant profile picture
@msbreb1978 then sell it. Lol
I see the GDX falling to $33.50 or so at worst. It is poised to break out above the downtrend line this time.
john galt III profile picture

All the technical analysts can see the huge GDX gap at $26.00 to $27.00 from April of last year. We're going there and that should be the bottom.
@john galt III It wasn't a huge gap. It was around half a point, and those gaps are not always filled in.
Seng Hong Teoh profile picture
@john galt III somehow, I am less sure it will go down this far. My gut feels the next wave is more likely up than down. Not a large conviction but getting something small in case I am wrong. I feel we are near the accumulation zone, $27 is very nice but may not get there.
Agreed, positioned in some September calls and risk/reward is worth taking a stab
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