Our stock pick of the month for November 2025 is Pasofino Gold  

With gold prices skyrocketing to nearly $4,000 an ounce it is tough to find cheap near production plays. With gold at these levels, investors are willing to pay premiums for potential cash flow and profits that will come from production.

Small producers or near production companies are mostly trading in the hundreds of millions of market cap or more. In addition, with higher gold prices and a dearth of exploration being spent by mid tiers and larger caps in recent years, companies will be looking for additional future production projects to add to cash flow, production, ounces in the ground and profits. I expect a lot of M and A going forward in the small cap and mid-tier space.

Recently, CDE announced a near $7 billion dollar takeover for NewGold NGD.   NewGold is producing about 450k ounces of gold in 2025 and has the potential to increase this. With CDE’s stock price soaring this year it gave them the ability to use their stock as currency to take over NewGold and increase their own production profile. 

There will be many more mid-tiers that take over these smaller producers as well.

Pasofino’s main property is the Dugbe Gold Project located in Liberia.  Despite its historical problems in 2001, that ended in 2003 with a civil war; Liberia is now one of the most stable mining jurisdictions in Africa, and a leading jurisdiction in West Africa. 

Pasofino has a 25 year Mineral Development Agreement (“MDA”), signed in 2019 and it basically provides for the government 10% ownership, tax framework and structure and the company’s community obligations until 2044.  The MDA can be renewed by mutual agreement for a subsequent 25 years, should the resource development deliver a life of mine plan to carry Pasofino for time after the expiration.

The company possesses a near 3.9-million-ounce total gold resource including 3.3M oz gold in the Measured and Indicated category converting 2.7M oz gold into Proven and Probable, captured in the current life of mine plan, as illustrated in the 2022 Feasibility Study.  There are an additional 600K oz gold in the Inferred category 

From the 2022 Feasibility Study, there is an estimated mine life of over 14 years, with an average production of roughly 171K oz of gold a year, with over 200,000oz gold per year for the first 5 years of commercial production. This was calculated back in 2022 when the gold price was trading near 1,600 dollars an ounce, so the amount of cash flow and profits generated is obviously much higher with gold near $4,000 an ounce as I write in November 2025.

Management – Brett Richards CEO 

Brett has 37 years of extensive experience in the mining and metals industry. • Accomplished mining executive with a proven track record in operational management, project development, construction, and corporate business development. Currently serves as a director for Nickel 28 Capital Corp., GoldX2 Inc., and Midnight Sun Mining. 

Brett has a proven track record in operational management, project development, construction, and corporate business development. Richards has held multiple CEO roles in West Africa and led the construction and commissioning of three mines, two in West Africa and the third in the Democratic Republic of Congo.

Richards also is incentivized, taking down hundreds of thousands of dollars of the first 70 cent private placement, and his family office has invested over CA$1M into the stock in the past 12 months, and he holds another 1 million options of stock at 0.60. 

Finances and Corporate Structure

The company is well financed having just completed a 12-million-dollar financing. Insiders took over CA$6.4M of this with board members taking on over CA$700K worth of stock. 

The corporate share structure is much tighter than it appears on the surface. Fully diluted there is roughly 194 million shares issued and outstanding. However, over half of these are owned by a large shareholder in the company (Mansa Resources) which owns approximately 50.9 percent of the company. In addition, much of the other shares are large insider or shareholder positions. Therefore, the shares that are really trading in the free trade float are much, much lower than is shown on the public structure (c.20%).

Cheap Near Production Play 

Let’s look at the value in this company. At the current stock price the company trades at roughly $20 USD per ounce in the ground. This is NOT an early stage exploration company, this is an advanced project will a full feasibility study that should go into production in roughly 36 months. Many companies with similar resource sizes that are near production trade at hundreds of dollars per ounce in the ground. 

In addition, at a $4,000 gold price the company will be generating roughly CA$500 million dollars a year in cash flow for 14 years. This is nearly $7 billion dollars of free cash flow over the life of mine. Trading at a fully diluted market cap of about $100 million we can see just how cheap this company is. 

I have enclosed some of the key metrics and numbers for the company below

Mineral Resource Estimated

Notes:

• Pre-tax NPV5% of USD690M (USD524M post-tax),using US$1,700 Au price
• 26.4% IRR (23.6% post-tax) using US$1,700 Au price Life of Mine (LOM) AISC 1,005 USD/oz

Initial Capital:

• 29 USD/t of ore cash cost
• Pre-production capital of USD397M excluding USD37M owners’ costs
• 3.3-year capital pay-back

Production Estimates

• 200koz per year Au production from open pit
• 2.76Moz gold in Mineral Reserves with an average grade of 1.30 g/t Au.
• Reserves support 2.27Moz produced over a 14-year LOM
• LOM metallurgical recovery of 83% from the FS test work
• Average annual production of 200koz for the first 5 years
• LOM strip ratio is low at 4.2:1 and lower for first 5 years
• 5Mtpa processing plant process pla
• The company has a long-term base. Despite having a large resource, it has not really participated in the bull market in gold and precious metals this year. The base is from about CA$0.40-0.75/share. It trades around CA$0.55/share as I write. If it can break above CA$0.75/share I think it can quickly move into the CA$1.00-1.50/share range. 
• nt midway between the two deposits

Technical Chart 

• – David Skarica

Disclosure: Wallstreetwindow.com, is owned by Timingwallstreet, Inc., which is being compensated by a third party (Leadgopher LLC DBA Pinnacle Ad Network) to publish this article. This third party paid Timingwallstreet Inc., $2,200 to produce and disseminate this and other similar articles about Pasofino Gold and send traffic to them through paid advertising campaigns for 30-days from the date of 11/12/2025. This compensation should be viewed as a major conflict with our ability to be unbiased, more specifically: This communication is for entertainment purposes only. Never invest purely based on our communication. For more on trading risks read our policy statement by clicking here. Mike Swanson is the President of Timingwallstreet, Inc. Because Pasifino Gold is a small cap stock with a market cap of less than $100 million he has put himself in a trading blackout on the stock and will not buy or sell a share of it for at least 30-days from the date of this publication date (11/12/2025). David Skarica also owns the stock. He will not sell the stock within 30 days of this writeup. 

The 5 P’s 

1. People – This is the most important aspect of a junior company. The people who run the deals , they put the properties in them, they raise the money, they deal with the regulations , raise the money etc. You want a management team with a history of success and building and selling companies.
2. Properties – What makes a company is quality properties if they don’t have something economic it won’t work. You like to see something in an area with a history of production.
3. Politics – You want to be in mining friendly countries and jurisdictions. If a country is unstable you could see problems at the mine, nationalisation etc…Many countries have a good solid history of mining laws and production 
4. Promotion – Well you do not want a company to be only promotion you need a company to be able to get investor interest. As they say, if a tree falls in the forest and no one hears it, did it fall? Well if a company has great results and  no one knows about it no one will buy! 
5. Phinancing (with a ph) – To drill and build a project you have to have the ability to raise money and the like!

Dios Padre Project 

Regency Silver fits the Bill on all accounts. Firstly, it has an excellent main project is the Dios Padre project which is located in Sonora, the largest mining province in Mexico. It is surrounded by numerous mines run by large cap and mid tier companies making it a prime take over target. The silver resource is on top of a large system. 

• Excellent access to infrastructure including a major highway, small plane access, power and skilled labour. Management has been working in the area for the last 18 years.
• The Dios Padre project contains two main targets. The first is the area around the historic Dios Padre silver mine.
• Dios Padre’s old silver mine workings contain a NI 43-101 inferred resource of 11.375 million AgEq ounces (94% Ag) at an average grade of 255.64 g/t AgEq. at a cutoff grade of 120 g/t AgEq. The interesting things about Dios Padre is that it hosts an even bigger gold/silver zone that is going to be drilled again. Some results to date have included:

• Hole FMR 12-06 with 1.9 meters of 3220 g/t silver inside an intercept of 32.5 meters of 408 g/t silver
• Hole FMR 17-06 with 5.2 meters of 1145 g/t silver
• Hole RDP 18-12 with 12.4 meters of 558 g/t silver
• Hole FMR 15-06 with 28.8 meters of 467.8 g/t silver

11.4 millions of silver is not a huge resource; it’s roughly just over 140,000 ounces of gold equivalent .I believe that investors can become too obsessed with a resource. If a resource was that great in many cases then why hasn’t a major swept in and taken it over or even a mid tier. Because most of the grades are too low and are not economic. Many companies that get taken over don’t have huge resources because companies see the value and geology in the project and sweep in and  buy the company out. Regency is surrounded by other producers in the area it could be a prime candidate for take over. They just closed a $4 million financing to launch a drill program before the end of this month. When a company drills like this it often creates positive news flow for itself and its stock.

It only has a $14 million market cap, with essentially $11 million worth of ounces in the ground.

Silver is clearing $40 now and gold is just going up, after having broken through to new highs just last week. Interest rate cuts are coming and more higher metals prices makes everything this company is doing worth more.

Political Situation 

When it comes to politics Mexico has been mining friendly for decades. Recently, they had a far left President who was anti mining. But he could not run again and the new prime minister despite some recent rhetoric hired a very mining friendly mining minister. We must remember the new President was the mayor of Mexico City and has all sorts of business contacts and she will not want to upset them. 

Management 

Management is lead by Bruce Bragagnolo the EXECUTIVE CHAIRMAN & CEO

• Mr. Bragagnolo was a director of Continuum Resources Ltd. when it acquired the San Jose Mine in Oaxaca, Mexico. Continuum Resources Ltd. merged with Fortuna Silver in 2004 and the San Jose Mine is now its flagship asset with 2022 production of 5.76 million ounces of silver and 34,000 ounces of gold. (Source: Fortuna Silver website).
• Director Michael Thomson was a founding director of the company that eventually became Palmarejo Silver and Gold and was also a director of GR Silver Mining Ltd., a Mexico focused silver company.
• Therefore Bruce has a history of production and selling companies to mid tiers.

Head Geologist is Michael Tucker

• Mr. Tucker is the CEO of Perseverance Nickel Corp. a private nickel explorer.
• Former Exploration Manager for Balmoral Resources Ltd.
• Company Qualified Person under the guidelines of NI 43-101.

Promotion and Phinancing 

The company has a strong marketing team and has gotten the word out in the past so they will be able to tell the story if there are more strong results. 

Finally when it comes to financing the company should be well financed, Bruce brought the company out in 2022 in one of the worst junior markets I have ever seen. They are in the final phases of completing a 10 cent financing of $4 million (which I participated in) which will be used for the next drilling program! 

Technically, I like the stock too.

It broke out of a bottom based when it went through $15 cents last month and is now trading around 20 cents for an entry point.

A little pause here could setup for a big run into the end of the year, especially after the the recent 2-1 rollback.

Go RSMX!

-David Skarica

Disclosure: Wallstreetwindow.com, is owned by Timingwallstreet, Inc., which is being compensated by a third party (Leadgopher LLC DBA Pinnacle Ad Network) to publish this article. This third party paid Timingwallstreet Inc., $4,500 to produce and disseminate this and other similar articles about Regency Silver and send traffic to them through paid advertising campaigns for 30-days from the date of 09/08/2025. This compensation should be viewed as a major conflict with our ability to be unbiased, more specifically: This communication is for entertainment purposes only. Never invest purely based on our communication. For more on trading risks read our policy statement by clicking here. Mike Swanson is the President of Timingwallstreet, Inc. Because Regency Silver is a small cap stock with a market cap of less than $100 million he has put himself in a trading blackout on the stock and will not buy or sell a share of it for at least 30-days from the date of this publication date (10/08/2025). David Skarica also owns the stock. He will not sell the stock within 30 days of this writeup. 

The 5 Ps 

1. People – This is the most important aspect of a junior company. The people who run the deals , they put the properties in them, they raise the money, they deal with the regulations , raise the money etc.. You want a management team with a history of success and building and selling companies.
2. Properties – What makes a company is quality properties if they don’t have something economic it won;t work. You like to see something in an area with a history of production.
3. Politics – You want to be in mining friendly countries and jurisdictions. If a country is unstable you could see problems at the mine, nationalisation etc…Many countries have a good solid history of mining laws and production 
4. Promotion – Well you do not want a company to be only promotion you need a company to be able to get investor interest. As they say, if a tree falls in the forest and no one hears it, did it fall? Well if a company has great results and  no one knows about it no one will buy! 
5. Phinancing (with a ph) – To drill and build a project you have to have the ability to raise money and the like!

Dios Padre Project 

Regency Silver fits the Bill on all accounts. Firstly, it has an excellent main project is the Dios Padres project which is located in Sonora, a mining province in Mexico. It is surrounded by numerous mines run by large cap and mid tier companies making it a prime take over target. 

• Excellent access to infrastructure including a major highway, small plane access, power and skilled labour. Management has been working in the area for the last 18 years.
• The Dios Padre project contains two main targets. The first is the area around the historic Dios Padre silver mine.
• Dios Padre’s old silver mine workings contain a NI 43-101 inferred resource of 11.375 million AgEq ounces (94% Ag) at an average grade of 255.64 g/t AgEq. at a cutoff grade of 120 g/t AgEq. Dios Padre is a high-grade deposit as evidenced by its drill intercepts which include:

• Hole FMR 12-06 with 1.9 meters of 3220 g/t silver inside an intercept of 32.5 meters of 408 g/t silver
• Hole FMR 17-06 with 5.2 meters of 1145 g/t silver
• Hole RDP 18-12 with 12.4 meters of 558 g/t silver
• Hole FMR 15-06 with 28.8 meters of 467.8 g/t silver

11.4 millions of silver is not a huge resource; it’s roughly just over 140,000 ounces of gold equivalent .I believe that investors can become too obsessed with a resource. If a resource was that great in many cases then why hasn’t a major swept in and taken it over or even a mid tier. Because most of the grades are too low and are not economic. Many companies that get taken over don’t have huge resources because companies see the value and geology in the project and sweep in and  buy the company out. As you can see as Regency is surrounded by other producers in the area it could be a prime candidate for take over. They are finalising a $2.5 million dollar financing which will be used for drilling  in the coming months. 

Political Situation 

When it comes to politics Mexico has been mining friendly for decades. Recently, they had a far left President who was anti mining. But he could not run again and the ban on open pit mining will probably be deemed unconstitutional and the new prime minister despite some recent rhetoric hired a very mining friendly mining minister. We must remember the new President was the mayor of Mexico City and has all sorts of business contacts and she will not want to upset them. 

Management 

Management is lead by  Bruce Bragagnool the EXECUTIVE CHAIRMAN & DIRECTOR

• Mr. Bragagnolo was a director of Continuum Resources Ltd. when it acquired the San Jose Mine in Oaxaca, Mexico. Continuum Resources Ltd. merged with Fortuna Silver in 2004 and the San Jose Mine is now its flagship asset with 2022 production of 5.76 million ounces of silver and 34,000 ounces of gold. (Source: Fortuna Silver website).
• Director Michael Thomson was a founding director of the company that eventually became Palmarejo Silver and Gold and was also a director of GR Silver Mining Ltd., a Mexico focused silver company.
• Therefore Bruce has a history of production and selling companies to mid tiers.

Gijsbert Groenewege is the President and CEO

• Managing Director at Silver Arrow Partners a NYC/Amsterdam based advisory firm.
• Co-founder of The Gold Arrow fund, investing in alternative investments since 2006.
• Co-founder of The Europe Company, a London based agency broker, in 1991.
• Served as director of several international mining companies

Promotion and Phinancing 

The company has a strong marketing team and has gotten the word out in the past so they will be able to tell the story if there are more strong results. 

Finally when it comes to financing the company should be well financed, Bruce brought the company out in 2022 in one of the worst junior markets I have ever seen. They are in the final phases of completing a 15 cent financing of $2.5 million (which I participated in) which will be used for the next drilling program! 

Technically, I like the stock too. It has a very nice base with resistance around 15-16 cents if it can break that I think it can really run. 

Go RSMX!

-David Skarica

Disclosure: Wallstreetwindow.com, is owned by Timingwallstreet, Inc., which is being compensated by a third party (Leadgopher LLC DBA Pinnacle Ad Network) to publish this article. This third party paid Timingwallstreet Inc., $1,400 to produce and disseminate this and other similar articles about Regency Silver and send traffic to them through paid advertising campaigns for 30-days from the date of 11/04/2024. This compensation should be viewed as a major conflict with our ability to be unbiased, more specifically: This communication is for entertainment purposes only. Never invest purely based on our communication. For more on trading risks read our policy statement by clicking here. Mike Swanson is the President of Timingwallstreet, Inc. Because Regency Silver is a small cap stock with a market cap of less than $100 million he has put himself in a trading blackout on the stock and will not buy or sell a share of it for at least 30-days from the date of this publication date (11/10/2024). David Skarica was paid $7700 Canadian from Regency for this and contracted out third parties as for the marketing services. He also owns the stock. He will not sell the stock within 30 days of this writeup. 

Firstly, they are in two metals that have long term demand. You all know my feelings on gold, with the United States running $2 trillion or 7 percent deficit of GDP and possessing a debt north of $34 trillion or 120 percent of GDP that will climb regardless of who wins the upcoming election there will continue to be monetization, debt increase and inflation in the coming years which will continue to push gold much higher than its current price of $2600 an ounce. 

Copper 

Copper like gold has strong long term demand fundamentals. Inflationary pressures will lift the price of all metals. 20 years ago 4.50 copper was unheard off as recently as the early 2000s it was under $1.00 a LB. However, now with inflation and new demand for Green Energy and Electric Vehicles .

As we can see from the chart above copper demand is expected to more than double from 2020 to 2050. Even if EV demand is not quite there, if say Trump were to win in the United States globally it will still increase and as well the shift to so called green energies. For example, where I reside in the Bahamas they are replacing the old antiquated Diesel plants with Solar Power. This means demand for copper.

On the supply side we can see that there will be a slight surplus in copper if the best case scenario for supply comes on. Despite all the lip service from politicians on green energy and the like we have seen little in the way of regulatory reform or tax reform to make mining metals like Copper or Nickel or Lithium easier, all which are needed for their so called green revolution. Therefore,without this investment I do not see us meeting the demand. In addition, if we took the middle point between the best case and worst case scenario for supply there would still be a deficit for years for copper for the next 25 years. 

The company’s district scale project is the Caballos Copper Project which is in the north east of Chile at a mineable altitude. The property is a 210 KM (so roughly 4 hour drive from Santiago) making it easily accessible. The project is Drill-Ready Mid-Way Between Giants, Los Pelambres and Los Bronces.

Some Highlights of the Caballos Project

IP pole-dipole survey (Quantec) 1998: “Line to line correlation with Potentially economic size. 

Continues to depth, possibly widening” 200 x 50 soil grid “>1.2 km continuous anomaly …Cu and associated Au & Mo… …felsic intrusive, Cu oxides and chalcopyrite”

Mineralized felsic intrusion: “~ 200 x 1000 m… …altered, covered by colluvium… …rock chips up to 0.7% Cu, 0.2 g/t Au 63 ppm Mo”

The company is working on 3,000 Metre Drilling Problem on Collabros starting this quarter. 

The Polimet Project is a high grade Epithermal Copper/Gold Deposit. This a high grade near surface deposit. They have the option to own this project based on a 2.1 million dollar work program years 1-3 and a 1.2 million dollar payment year 4. They will do mapping in the 4th quarter of 2024 and plan a 2000 drill program in 2025.

Finally, the Taqentren Project in Argentina is a Gold project with over 68,000 hectares of area. It is in in Rio Negro which is a mining friendly district of Argentina and near two major finds Calactreu which has over 1 million ounces of gold and Navidad which possesses 632 million ounces of silver. Mapping and Trenching are planned in the short term with a potential 1.5 million dollar program later in 2025. 

In addition, I always like when I have had past success with a company’s management . People and Management are always the most important part of any company . I have known the chairman Campbell Smyth for nearly 23 years. The first deal he introduced to me International PBX soared in price and he also introduced me to Paramount Gold and Silver (which is stilled NYSE Listed) and sold its San Miguel property to Coeur D’Alene for nearly $147 million dollars, finally Campbell introduced me to Cityview (a Oil and Gas deal in Angola which at its peak went up nearly 20x in value from 1 cent to nearly 20 cents!  

I have already made money in Fitzroy, it traded as Norseman Silver back in 2020 and I purchased a 5 cent financing which rocked to nearly 70 cents a share! 

Campbell has raised millions of dollars for the junior mining industry over the years and worked for hedge funds and investment funds for nearly 15 years before entering venture capital. 

The CEO is Merlin Marr-Johnson . He has 29 years’ experience in the minerals sector, including work as an exploration geologist for Rio Tinto, an analyst for HSBC and a portfolio manager for Blakeney Management. Merlin has worked on projects in South America, Africa, Central Asia and Europe, and as CEO he has brought two companies to AIM, London. He speaks several languages, including Spanish. Merlin is also non-executive director for Salazar Resources (TSXV). 

Technically, I really like the stock chart. The stock has been rallying towards the 20 cent for most of this year and I think if once 22 cents or so is broken on the upside it could really fly higher . If 22 is broken there isn’t much resistance on the stock till about the 40-50 cent area.

Disclosure: Wallstreetwindow.com, is owned by Timingwallstreet, Inc., which is being compensated by a third party (Leadgopher LLC DBA Pinnacle Ad Network) to publish this article. This third party paid Timingwallstreet Inc., $2,000 to produce and disseminate this and other similar articles about Fitzroy Minerals and send traffic to them through paid advertising campaigns for 30-days from the date of 10/14/2023. This compensation should be viewed as a major conflict with our ability to be unbiased, more specifically: This communication is for entertainment purposes only. Never invest purely based on our communication. For more on trading risks read our policy statement by clicking here. Mike Swanson is the President of Timingwallstreet, Inc.  Because Fitzroy Minerals is a small cap stock with a market cap of less than $100 million he has put himself in a trading blackout on the stock and will not buy or sell a share of it for at least 30-days from the date of this publication date (10/14/2023).

Generation Z consists of people born after 1995 that are under 30 years of age. They came alive when the internet had already came to dominate society and matured when the cell phone succeeded into becoming an addictive device. They became teenagers as social media amplified that addiction.

A few years ago a series of studies came out showing that social media had a psychological toll on young people, causing depression and suicide, as they compared themselves to what they see in the feeds. Eating disorders proliferated. Studies showed that the more time people spend online the worse they feel.

As one article puts it: “A 2017 study of over half a million eighth through 12th graders found that the number exhibiting high levels of depressive symptoms increased by 33 percent between 2010 and 2015. In the same period, the suicide rate for girls in that age group increased by 65 percent.”

“Smartphones were introduced in 2007, and by 2015 fully 92 percent of teens and young adults owned a smartphone. The rise in depressive symptoms correlates with smartphone adoption during that period, even when matched year by year, observes the study’s lead author, San Diego State University psychologist Jean Twenge, PhD.”

For roughly two years such studies caused some outrage, serious investigative reporting, and talk of doing something in reaction. Congress held hearings. Here is a clip from one of them.

People like Mark Zuckerberg got shamed, but nothing happened and that story – and the worry – has now pretty much vanished.

The parents of Generation Z, I suppose decided that they themselves were too addicted to their phones and social media feeds to want to actually change anything, even if it all damaged their children, and likely themselves. If anything the apps and feeds have only gotten more addictive, with the rise in short-form video, Instagram, and TikTok.

The US government has said that TikTok is a national security threat and people just shrug, because they are too addicted to it to care.

There was a fear, too, too about “fake news” on the internet, that people wouldn’t be able to discern the difference between what was real and not real in their feeds. There was a real concern that Generation Z, in particular, would be vulnerable, as they had no experience of life before the internet, and almost none of them exist without it.

The Google study reveals, though, that something else has happened.

It found that Generation Z can discern the difference between what is fake, false, and the real.

But, it also found that they simply does not care about that.

They do not fact check.

Whereas older users, do, and sometimes express outrage over a fake story in their feed, Generation Z does not care.

It turns out that they look at their feeds and consume information differently than what was expected.

“Within a week of actual research, we just threw out the term information literacy,” said Yasmin Green, who was in charge of the study. They found that they are “not on a linear journey to evaluate the veracity of anything.” Instead, they’re engaged in what the researchers call “information sensibility,” defined as a “socially informed” practice that relies on “folk heuristics of credibility.”

In plain English, what they do is look at the headlines and then rush to read the comments to see how people react to them.

They look to see if the dominant reaction is in alignment with how they already feel about the story.

If they are in agreement with the majority reaction, they feel reassured, and then look down upon those reacting differently.

If they are in disagreement with that majority reaction, they may then decide to study the issue more, by looking for an expert online who will talk more about it, usually someone on Youtube, Tiktok, or some other social media site, or they will just scroll until they see a story or meme that agrees with them for a dose of reassurance.

As a Business Insider article, about this study put it, “Gen Zers approach most of their digital experience in what the researchers call ‘timepass’ mode, just looking to not be bored. If they want to answer a question or learn something new, they might turn to a search engine, but they’re acquiring new information mainly via their social feeds, which are algorithmically pruned to reflect what they care about and who they trust.”

I subscribe to several news industry publications and last year Pew did a study about how Generation Z gets its news. It advocated that news organizations focus on social media and predicted that short-form video would become the future of news. News outlets, even local news, would have to turn its reporters into social media influencers, was one argument made.

What is fascinating, and troubling, is how the Google Study reveals a dominate online mentality that is really focused on following a herd, instead of being focused on learning more information and the truth for the sake of it.

Before the internet, there was a time in which people worried about how television was impacting society and dumbing down the quality of information that people consume, in comparison to print and even radio.

Marshall McLuhan, the father of media studies, coined the phrase “the medium is the message” in his 1964 book Understanding the Media.

What the phrase means is that the form of the media should be seen as just as important as the content of its message.

As a Wikipedia entry puts it, “The main concept of McLuhan’s argument (later elaborated upon in The Medium Is the Massage) is that new technologies (such as alphabets, printing presses, and even speech) exert a gravitational effect on cognition, which in turn, affects social organization: print technology changes our perceptual habits—”visual homogenizing of experience”—which in turn affects social interactions—”fosters a mentality that gradually resists all but a…specialist outlook”. According to McLuhan, this advance of print technology contributed to and made possible most of the salient trends in the modern period in the Western world: individualism, democracy, Protestantism, capitalism, and nationalism. For McLuhan, these trends all reverberate with print technology’s principle of “segmentation of actions and functions and principle of visual quantification.”

Think about the social media meme.

The meme is the declaration of a message visible to all of those seeing it.

You do not see a meme by yourself, but know that others, possibly tens of thousands, are also seeing it.

The meme by its very existence in the feed creates an us versus them dynamic.

Are you in support of the meme’s message or against it?

Memetic engineering is the application of memes to change the perceptions of the masses and the continual consumption of memes and social messages overtime locks the human brain into a style of thought. This is a serious business, with even the Pentagon running secret covert operations as experiments, using countries such as the Philippines as a playpen, to perfect their own processes in “information warfare.”

The Google study of Generation Z shows you this new reality.

We have seen the creation of a new mass man molded by groupthink and primed for an authoritarian order, what the philosopher Frederick Nietzsche, 140 years ago, termed the “last man,” the passive nihilist, who seeks out and is content with constant amusement, but is incapable of self-actualization.

He causes no problems for big-brother, and is the perfect citizen as predicted by the character mogul Arthur Jenson in the movie 1976 Network, ruled over by their faceless global corporate rulers.

Television could not create the world of Arthur Jensen, but social media feeds did, some say.

Social media feeds are filled with drivel and trash that mold your mind into mush and cause you to waste your life away as you spend time looking at them.

One day you may wake up and realize how boring it actually is.

There is a big difference between reading published physical print works and social media feeds.

The social media feed is “instant.”

Something posted is constantly being displaced by a new post, so the feed has the appearance of being real time reality.

The “news cycle” has been sped up.

When you read a physical print work, privately, you are reading something that was published in the past.

This puts the reader in a position of judgement, all by themselves, over what they are reading.

To do that they have to engage in rational thought and can keep their thoughts to themself.

They come out of that process with more knowledge, or understanding, over the topic of what they read about.

Even if the work is a work of fiction they can learn emotionally from the story that they are reading.

Spending time reading published physical works leads one to have an open mind, eager to learn, bettering oneself and growing, while the social media feed is all a messaging of us versus them, causing one to feel stressed, anxious, but no choice but to scroll faster for more to get more stimulation, whether negative or positive, from the feed.

Or one can turn to it off and walkaway from it…and the longer one does that the better…

The impact that memetic engineering has had on your brain can be reversed by turning your social media feeds off.

Elon is wrong, those that own the social media feeds and “control the memes” do not rule the universe, much less the world, because only God does that.

What is more the feeds may be here today, but they are only fifteen years old, and are not going to exist forever. There was a time when people used telegrams to send messages to one another.

No one does that anymore.

Few still use typewriters too.

-Mike

The flagship US S&P 500 stock index has enjoyed a banner 2024, blasting up 18.8% year-to-date in mid-July!  Traders’ fascination with mega-cap techs involved in artificial intelligence fueled fully 38 new record-high closes this year, over 1/4th of all trading days.  The resulting greed and euphoria have left the SPX chronically- and extremely-overbought, mostly stretching far above its baseline 200-day moving average.

Since this latest mighty upleg started powering higher in late October, there had been only one minor pullback until last month.  Over several weeks in April, the SPX retreated 5.5%.  By mid-July, the SPX had soared an impressive 37.6% higher in just 8.6 months!  At that latest record high, the S&P 500 had shot way up to 1.149x its 200dma.  Q2’24’s earnings season was getting underway and looking fantastic.

Normally earnings beats stoke bullishness fueling nice rallies in big US stocks.  But the SPX ignored them to fall 4.7% into late July.  Then Japan’s extraordinary market chaos spooked world traders last week, and the SPX plunged again deepening its pullback to 8.5% over several weeks.  This selloff is threatening formal correction territory down 10%+, which would spawn increasingly-bearish sentiment among traders.

In just three trading days, the SPX plunged 6.1% to Monday’s latest pullback low.  Inarguably that was Japan-driven.  Those were the same few days after the Bank of Japan hiked its rate from a 0.0%-to-0.1% range to “around 0.25 percent”, to attempt to reverse its plummeting yen.  That currency had collapsed 14.7% YTD by early July, hitting its worst levels relative to the US dollar since way back in December 1986!

That weaker yen was stoking price inflation, forcing import prices higher which Japan heavily depends on.  But that mere 15-basis-point rate hike started unwinding the enormous global yen carry trade.  Traders borrow yen for next to nothing, convert it into other currencies, and buy higher-yielding assets including US mega-cap-tech stocks.  Unbelievably-heavy and brutal selling slammed Japanese stock markets.

Astoundingly in those three trading days after the BoJ’s little hike from almost zero, Japan’s benchmark Nikkei 225 stock index crashed 19.5%!  That included a shocking 12.4% plummeting on Monday alone, the second-worst down day in Japanese stock-market history after Black Monday in October 1987!  Fear soared globally, with the S&P 500’s VIX implied-volatility fear gauge skyrocketing to 65.7 that morning!

Though anything over 50 flags extreme unsustainable fear which is always short-lived, the SPX still plunged 3.0% that day.  While Japan’s stock-market action was crazy, I can’t recall Japanese stock-market fortunes ever mattering for American ones.  That sure looked like a fragility warning, highlighting the precariousness of these lofty US stock markets.  Their AI bubble may very well be starting to burst.

For 28 quarters in a row now, I’ve painstakingly analyzed the latest results just reported by the 25 biggest SPX components and US companies.  Almost all American investors are heavily deployed in these behemoths due to fund managers crowding in.  How big US stocks are collectively faring fundamentally offers clues on what markets are likely to do in coming months.  This table includes key SPX-top-25-component results.

Each of these elite companies’ symbols are preceded by their SPX rankings changes over this past year, and followed by their index weightings exiting Q2’24.  Next comes their quarter-end market capitalizations and year-over-year changes, revealing how these stocks performed.  Looking at market caps instead of stock prices helps neutralize the distorting effects of massive stock buybacks artificially boosting prices.

Next comes a bunch of hard accounting data directly from 10-Q reports filed with the SEC.  That includes each SPX-top-25 component’s quarterly sales, earnings, stock buybacks, dividends, and operating cash flows generated.  Their quarter-end trailing-twelve-month price-to-earnings ratios are also shown.  YoY percentage changes are included unless they’d be misleading, such as comparing positives with negatives.

Overall the big US stocks’ Q2’24 results proved phenomenal, confirming why these companies are the best.  But despite their continuing size-defying growth, troubling signs abound.  These include extreme concentration, extreme overvaluations, and the overwhelming probability that these outsized growth rates aren’t sustainable.  That’s even riskier if the US economy slows down as Americans struggle with inflation.

For years US stock markets have been starkly bifurcated, with the legendary Magnificent 7 mega-cap techs radically outperforming everything else.  Microsoft, Apple, NVIDIA, Alphabet, Amazon, Meta, and Tesla are universally-loved, averaging mind-boggling $2,287b market caps exiting Q2!  These giants are now responsible for a record 32.7% of the SPX’s entire weighting, exceedingly-risky off-the-charts concentration!

That catapulted the SPX top 25’s weighting to 50.2%, also the highest ever witnessed.  That’s effectively half the US stock markets, with the Mag7 alone a third!  Whenever some subset of these mega-cap techs inevitably suffer heavy selling, they will drag down the broader markets with them.  This Monday’s Japanic was a great case in point, with global fear peaking about an hour before US stock markets opened.

At worst soon after, the SPX was down 4.3% intraday.  But the comparable losses in MSFT, AAPL, NVDA, GOOGL, AMZN, META, and TSLA were much worse at 5.6%, 10.9%, 15.5%, 7.0%, 9.7%, 7.6%, and 12.4%!  Mega-cap techs leading to the downside was even more pronounced during recent weeks’ 8.5% SPX pullback.  From their own recent-month closing highs to latest lows, they also plunged way farther.

MSFT, AAPL, NVDA, GOOGL, AMZN, META, and TSLA suffered ugly outsized 15.5%, 11.7%, 26.7%, 17.2%, 19.5%, 16.0%, and 27.2% losses so far in this pullback!  And those will deepen if the SPX keeps rolling over into a 10%+ correction or a deeper 20%+ new bear.  Market-darling stocks that leverage the SPX on the way up also amplify it on the way down.  All that recent selling came despite fantastic Q2 results.

Amazingly given their vast sizes, the Magnificent 7’s aggregate revenues soared 15.3% YoY last quarter to $473.8b!  That’s an incredible achievement, which these great companies sure deserve credit for.  That trounced the next-18-largest US companies, the rest of the SPX top 25.  Their collective sales only edged up 1.6% YoY to $754.6b.  Adjusted for CPI inflation now running 3.0% YoY, that’s actually real shrinkage.

But like usual this comparison is skewed by composition changes near the bottom of these elite ranks.  Netflix blasted into the SPX top 25 over this past year, displacing oil super-major Chevron.  While NFLX did $9.6b in sales in Q2, CVX’s dwarfed that at $51.2b!  So had these last few big US stocks stayed stable, next-18-largest revenues growth would’ve looked better yet still really lagged the mega-cap-tech behemoths.

The same was true on the earnings front, with the Mag7’s bottom-line profits reported to the SEC under Generally Accepted Accounting Principles rocketing up 42.4% YoY to $110.4b!  That again dwarfed the next 18 largest’s 11.8%-YoY increase to $112.1b.  Together the entire SPX top 25’s $222.5b was the highest on record, exceeding Q4’23’s $218.1b!  The biggest-and-best US companies are earning tons of money.

Nevertheless these massive profits aren’t sustainable forever and stock prices are way too high even given such colossal earnings.  This economy is tough for the great majority of Americans, who are struggling with stagnant incomes yet greatly-inflated prices.  Wall Street loves to tout disinflation, the rate of increase moderating.  But general prices remain way higher than pre-pandemic levels, a huge problem.

Everyone responsible for a household or business has lots of stories about how expensive everything needed for existing has become.  That includes shelter, food, energy, insurance, medical, education, repairs, and the list goes on.  The US government’s leading CPI inflation gauge claims general prices have only risen 22.3% since late 2019.  But that’s intentionally lowballed for political reasons, reality is far worse.

Based on extensive reading of economics stories in the financial media in recent years, actual inflation is double to triple that.  General price levels for necessities are up on the order of 50% to 75%, crushing increases that are difficult to bear!  So roughly 9/10ths of Americans are having to make hard decisions on budgeting.  They are increasingly mostly buying things they have to, leaving little money for things they want to.

Much-less discretionary income left after necessities is a serious downside risk for sales and profits among most of these SPX-top-25 companies.  Everyone loves new Apple iPhones, but with innovation dwindling older models remain fast and useful for several years or longer.  If cash-strapped Americans stretch out their iPhone upgrade cycles, AAPL’s revenues and earnings will fall forcing its valuation even higher.

Tesla’s expensive battery cars are way-less-necessary than smartphones, true luxuries.  Even upper-middle-class Americans are being pinched by inflated prices, leaving way less money to splurge on new cars.  Amazon faces waning-discretionary-spending risks too, as some big fraction of AMZN’s sales are from things people want rather than need.  Slower consumer spending would really slam corporate profits.

And when Americans have less money to spend on non-essentials, businesses increasingly face tough sledding.  As their sales slow and profits plunge, the easiest expenses for them to slash are marketing.  Alphabet and Meta are totally dependent on business advertising, and Amazon and Microsoft also have some exposure on that front.  If business ad spends wane in harder economic times, mega-cap tech is in trouble.

With Americans forced to divert higher percentages of their incomes into shelter, food, energy, insurance, and other essentials, most big US companies are at risk of serious slowdowns in revenues and earnings.  After the mega-cap techs, the hottest giant company today is Eli Lilly thanks to its GLP-1 weight-loss drugs.  LLY sells two variants of these, one for treating diabetes and another just for vanity pound shedding.

In Q2’24, their combined sales skyrocketed 342.4% YoY to $4.3b!  That rivals mighty NVIDIA’s 262.1% YoY revenues growth last quarter on stellar demand for its graphics chips used in AI processing.  These GLP-1 drugs may be effective, but the jury is still out on longer-term side effects.  Yet at $1,000+ per month without insurance, most Americans can’t afford them as inflated prices consume their take-home pay.

They may have to resort to eating less often and exercising more to manage their weights.  Out of all these SPX-top-25 stocks, only Walmart and Costco are greatly benefitting from this budget-busting price environment.  As this leading discounter and wholesaler save people money, their grocery market shares and sales are growing.  I shop at Costco every week to buy fresh food for my family, and it is bursting at the seams!

My kids are both tall-and-strong athletes deep into high-level competitive basketball, along with other sports.  I joke with my wife that if it wasn’t for Costco we couldn’t afford to feed them!  Despite big price increases even at Costco in recent years, everything from meat to cheese to fruit is way more affordable there.  COST operates at razor-thin margins, with membership fees responsible for over 2/3rds of its profits.

Even NVIDIA isn’t immune to an economic slowdown from cash-strapped Americans.  Its stratospheric sales and profits growth over the last year was mostly fueled by other mega-cap techs buying its GPUs for large-language-model AI use.  But despite hundreds of billions of dollars invested in AI infrastructure, it hasn’t yet found any profitable uses.  As revenues slow at NVDA’s customers, so will their GPU purchases.

These lofty stock markets are priced for perfection, fully betting for a US economy led by strong consumer-spending growth for years to come.  But with Americans forced to shunt high-and-rising fractions of their incomes into buying necessities at inflated prices, discretionary spending is increasingly dwindling.  And slumping revenues are directly leveraged by earnings, which fall much faster.  That’s an ominous portent.

The big US stocks’ valuations remain deep into dangerous bubble territory despite their fantastic quarterly results.  Exiting Q2, the SPX top 25 averaged 43.6x trailing-twelve-month price-to-earnings ratios!  Interestingly that’s the one place there wasn’t a divergence between the Magnificent 7 and the next 18 largest, with average P/Es of 44.2x and 43.4x respectively.  These valuations are extreme by all historical standards.

Over the last century-and-a-half or so, fair-value for US stock markets averaged around 14x earnings.  Twice that at 28x is where formal stock-bubble territory starts.  The longer stock markets spend at bubble valuations, the greater the odds a major secular bear market will awaken to maul prices back down to mean revert and overshoot.  Today’s 44x is crazy-high, virtually guaranteeing an overdue bear is stalking!

While big US stocks are earning massive profits, their stock prices are still far beyond levels justified by those.  Traditionally major bear markets run until SPX P/E ratios fall under 14x, sometimes as low as half fair-value at 7x.  But even if the inevitable bear merely forces P/Es back to a still-very-overvalued 21x, that would more than cut the SPX in half!  The beloved Magnificent 7 would lead the way down, faring way worse.

While euphoric traders have forgotten about stock bears, they are serious and not to be trifled with.  From March 2000 to October 2002 after the last time the SPX was this overvalued, it plunged 49.1% over 30.5 months!  Later from October 2007 to March 2009, the SPX plummeted 56.8% in 17.0 months!  There is plenty of modern precedent for bears gutting excessive stock prices, especially starting from bubble toppings.

And even milder minor bears are dangerous, with the last one clawing the SPX down 25.4% from early January 2022 to mid-October that same year.  Before that bear, Wall Street asserted that fundamentally-strong mega-cap techs were among the safest stocks.  Yet surrounding that SPX-bear span, the Mag7 market-darlings averaged brutal 54.6% losses more than doubling the SPX’s!  Bubble stocks are never refuges.

As if that wasn’t menacing enough, slowing discretionary consumer spending will exacerbate bubble valuations giving any bear more fodder.  If a big US stock’s revenues slump 5%, its earnings could easily drop 20%+.  That means if it had a current average 44x P/E, that could surge near 55x.  That makes for proportionally more downside as a bear does its gory work of realigning stock prices with underlying earnings.

Corporate stock buybacks are another big risk along these lines.  Last quarter the SPX top 25’s collective buybacks soared 29.0% YoY to $87.7b, still huge but well off Q4’21’s $107.3b record.  These buybacks aren’t only done to bid stock prices higher boosting managements’ bonuses, but also to goose earnings per share.  Buybacks retire shares, and the fewer outstanding the higher the earnings spread across the remainder.

Like businesses slashing their advertising spending when times are tough, cutting buybacks is the easiest way for big US stocks to preserve cash in a weakening economy.  And if these enormous buybacks keep slowing, the earnings-per-share drops will more closely match underlying profits.  That too will leave bubble valuations higher than they would’ve been with huge buybacks, exacerbating any rebalancing bear.

Like Americans can’t cut out food no matter how expensive it gets, corporations are loath to reduce their dividends.  The SPX top 25’s surged 10.8% YoY to $45.5b in Q2.  Many investors and funds rely on these dividends to yield income, and stocks look way less attractive without them.  So if companies eventually have to significantly cut dividends due to slowing consumer spending hurting sales, there’ll be hell to pay.

Any big dividend cuts will really intensify bear selling, as we just saw with another big US stock.  Once-revered chipmaker Intel isn’t an SPX-top-25 stock, ranking as 73rd at the end of Q2.  Just last week in its latest quarterlies, INTC warned it was “suspending the dividend starting in the fourth quarter”.  Despite its stock already being quite low, that day alone it plummeted another 26.1%!  Dividends are always sacrosanct.

Finally the big US stocks’ cash flows generated from operations last quarter were also strong, surging 12.0% YoY to $239.5b.  But again all that growth came from the Mag7, which saw OCFs soar 26.5% YoY to $156.3b!  The next 18 largest’s operating cash flows excluding money-center banks plunged 23.8% YoY to $82.2b.  But that too was skewed lower by Netflix forcing out Chevron from the SPX-top-25 ranks.

Make no mistake, despite big US stocks just reporting spectacular Q2 results these bubble-valued stock markets remain dangerous.  Valuations are still extreme as American consumers have increasingly less discretionary income to spend on wants.  Unless general price levels somehow magically retreat back to pre-pandemic ranges, corporate profits are under serious threat.  And huge disinflation ain’t gonna happen.

Today’s inflation nightmare gutting Americans’ finances and about to erode stock markets was caused by extreme Fed money printing and out-of-control government spending.  In just 25.5 months after March 2020’s pandemic-lockdown stock panic, the Fed recklessly ballooned its balance sheet an absurd 115.6% or $4,807b higher.  Despite quantitative-tightening bond selling since, that remains up fully 72.6% or $3,020b!

With top Fed officials itching to start cutting rates soon, they are also tapering their QT bond selling which is the only meaningful way to shrink the US money supply.  And no matter who controls the presidency or Congress after November’s elections, neither party will slash government spending back down anywhere near 2019 levels.  These inflated general prices are here to stay, which will increasingly weigh on stock markets.

American investors need to prudently diversify their risky stock-heavy portfolios into gold and its miners’ stocks, which thrive in inflationary times.  With gold powering up to new nominal records this year on big Chinese-investor and central-bank buying, gold stocks have lots of catch-up rallying to do.  They are nearing their tipping point where traders turn bullish and rush in, fueling a massive mean-reversion-overshoot bull.

Successful trading demands always staying informed on markets, to understand opportunities as they arise.  We can help!  For decades we’ve published popular weekly and monthly newsletters focused on contrarian speculation and investment.  They draw on my vast experience, knowledge, wisdom, and ongoing research to explain what’s going on in the markets, why, and how to trade them with specific stocks.

Our holistic integrated contrarian approach has proven very successful, and you can reap the benefits for only $10 an issue.  We extensively research gold and silver miners to find cheap fundamentally-superior mid-tiers and juniors with outsized upside potential.  Sign up for free e-mail notifications when we publish new content.  Even better, subscribe today to our acclaimed newsletters and start growing smarter and richer!

The bottom line is big US stocks just reported a spectacular quarter, with near-record revenues and the strongest earnings ever witnessed.  Yet despite these great achievements, valuations remain deep into dangerous bubble territory.  Even these huge profits are nowhere near fat enough to justify these lofty prevailing stock prices.  That portends a looming bear market to maul prices back down in line with earnings.

Even worse, these extreme valuations will likely head higher until that bear really roars.  Corporate sales and profits should come under increasing pressure as cash-strapped Americans cut back on discretionary purchases.  Inflated necessities’ prices are consuming more of their incomes.  Declining revenues will be amplified by earnings, leaving US stock markets even more bubbly.  Traders need to reallocate some into gold.

THIS ARTICLE ORIGINALLY POSTED HERE.

For a quarter-century now, I’ve been studying, trading, and writing newsletters primarily about gold and its miners’ stocks.  Since 2000 I’ve penned 1,132 of these weekly web essays, 1,107 weekly subscription newsletters, and another 289 monthly subscription newsletters!  The latter two have recommended and closed fully 1,510 individual mostly-gold-stock trades, which have all averaged 15.6% annualized realized gains.

That’s a great record spread across 25 years, roughly twice the long-term stock-market average!  The key to that is staying informed, always following gold stocks no matter how they are faring.  That’s the only way to consistently buy lower then later sell higher.  Sadly the vast majority of traders miss most opportunities because they only pay attention when sectors are hot, after big gains have already been won.

That natural human tendency has been the most-frustrating part of the newsletter business for me.  The most-important times for traders to be interested in gold stocks are when they are beaten-down and deeply out of favor.  Those are the best buy-relatively-low opportunities, the easiest times to multiply wealth.  Yet around those pivotal lows, interest and sales wither as bearishness reigns and traders capitulate.

Gold stocks’ last couple major lows weren’t long ago, early October 2023 and late February 2024.  Then the leading GDX gold-stock ETF and benchmark plunged to just $25.91 and $25.79.  I pounded the table on the incredible opportunities in this sector around both lows, and we filled our newsletter trading books with cheap fundamentally-superior mid-tier and junior miners.  Only diligent traders paying attention participated.

That latest week languishing gold stocks bottomed, I wrote a whole essay explaining why that was such a fantastic buying opportunity in late February.  Traders need to stay informed and engaged when sectors are unloved and deeply oversold after just selling off substantially.  That’s why I’ve subscribed to excellent financial newsletters covering various sectors since high school, and later went into this business myself.

Staying abreast of markets professionally requires great expertise painstakingly forged over decades of full-time work.  Few analysts attain this to greater degrees than seasoned newsletter writers.  Rather than putting in all that work myself for other sectors, I can reap their experts’ awesome wisdom in little time for trivial subscription fees.  But newsletters are only valuable if you consistently digest them through all cycles.

On the last day of February my essay concluded “Excessive selling has slammed GDX way back down to early-October levels when today’s gold upleg was born.  Yet that makes zero sense fundamentally with gold remaining about 12% higher.  These seriously-oversold gold stocks riddled with capitulatory bearishness is an anomaly that will prove short-lived.  They are due to soon mean revert sharply higher with gold.”

Naturally that proved correct, as you’d expect after a quarter-century of studying a sector.  Over the next 4.6 months into mid-July, GDX blasted 52.3% higher.  Our newsletter trades added around those lows have fared even better, with unrealized gains running as high as 97.2% then!  There’s no magic in that, just time on task.  The more years anyone devotes to studying anything, the more their knowledge on it grows.

Our innately-human herd psychology works alike across all markets, from mega-cap tech stocks to crypto to physical commodities to gold stocks.  When prices are low after major selloffs, bearishness and apathy lead traders to abandon sectors.  Right when they should be diligently engaged looking for opportunities to buy in relatively-low, they flee.  That’s why most speculators and investors ultimately fail in the markets.

Then later when those same perpetually-cyclical sectors inevitably rebound soaring to lofty heights, traders flock back.  They get caught up in the popular greed and euphoria stoked by increasing and more-bullish financial-media coverage.  As their interest soars they flood into sector newsletters, then end up buying in relatively-high after the lion’s share of gains have already been won.  Way late, they usually ride down selloffs.

Sector psychology follows prevailing price levels, slowly swinging like a giant pendulum between greed and fear.  The reason I’m writing today’s essay is gold-stock sentiment sure seems to be nearing the halfway point at the bottom of that arc!  This sector is no longer mired in fear like in late February when traders should’ve been aggressively buying.  But despite their surge, gold stocks aren’t yet drenched in greed.

This chart reveals GDX’s mounting bull market over the past couple years.  Gold stocks have achieved higher lows and higher highs on balance, carving an indisputable secular uptrend.  From this sector’s last major bear-market low in late September 2022 to mid-July 2024, GDX has powered 79.6% higher.  Yet this young bull remains super-small by sector standards, with much-larger gains coming as traders return.

Gold stocks are ultimately leveraged plays on the metal they mine, which overwhelmingly drives their profits and hence stock prices.  GDX’s bull is mirroring gold’s underlying one over this same span, where the yellow metal climbed 51.9% at best.  The major gold stocks have actually only amplified gold by 1.5x in this bull, still way under their usual 2x-to-3x range!  Sector psychology has remained stubbornly bearish.

That resulted from a pair of crazy anomalies.  First gold and especially gold stocks collapsed in mid-2022, as the Fed’s most-extreme hiking cycle in its history launched the US dollar stratospheric.  That fueled excessive gold-stock bearishness taking longer than normal to work off.  Second the US stock markets have been soaring in their latest AI bubble led by mega-cap tech, distracting traders from all other sectors.

But all that is changing, with gold enjoying a remarkable breakout to many new nominal records this year!  Incidentally on that experience front, I predicted that in my early-January essay “Gold’s 2024 Breakout Upleg”.  With gold still at $2,043, I concluded “gold’s breakout upleg into nominal record territory is set to accelerate in 2024.  New records generate bullish financial-media coverage putting gold back on investors’ radars.”

Even American stock investors who have ignored gold’s entire upleg are starting to take notice as the AI stock bubble looks to be bursting.  The combined gold-bullion holdings of the mighty American GLD and IAU gold ETFs grew 1.7% or 20.2 metric tons in July, their biggest monthly build since March 2022!  Capital inflows into gold have grown as the flagship S&P 500 stock index pulled back 4.7% in seven trading days.

Today’s gold upleg is already up 35.5% at best since early October, despite no net buying from American stock investors who normally fuel major ones.  During that exact span, GLD+IAU holdings actually fell 4.5% or 57.2t!  This gold upleg is so remarkable because it has mostly been fueled by Chinese investors and central banks buying.  With American stock investors only starting to return, gold is heading much higher.

Nothing drives and widens interest in any sector like new record highs, with bitcoin and mega-cap tech stocks being great recent examples.  The more new records achieved, the more the financial media covers a sector and the more-bullish that coverage.  That stokes popular greed attracting in increasing numbers of traders to chase those gains.  This dynamic forms powerful virtuous circles of self-feeding buying.

Gold’s last two uplegs achieving new record streaks both crested in 2020, at monster 42.7% and 40.0% gains!  Their dominant drivers were American stock investors flooding into the major gold ETFs to chase gold’s momentum.  GLD+IAU holdings soared 30.4% or 314.2t during the first and skyrocketed 35.3% or 460.5t in the second!  Today’s gold upleg can grow much larger yet as American stock investors reallocate back.

But gold doesn’t need to push deeper into nominal-record territory for gold stocks to soar.  Again gold is up 35.5% at best since early October, a mighty upleg.  Yet GDX has merely climbed 51.6% during that timeframe, the major gold stocks only leveraging gold by 1.5x.  They will almost certainly again amplify that by 2x to 3x before gold’s upleg gives up its ghost, implying overall GDX gains growing to 71% to 106%.

The higher gold’s own upleg ultimately powers, the bigger gold stocks’ proportional upside potential.  The higher they rally, the more interested traders will become and the more capital they’ll deploy.  That will force this sector’s sentiment pendulum back through the middle of its arc towards the greed side.  With gold stocks nearing a major secular breakout, that key psychological tipping point is likely coming soon.

GDX just hit $39.28 at best in mid-July.  But at normal 2x-to-3x leverage to gold’s upleg gains so far, that boosts GDX to about $44.25 to $53.50.  That entire range is well above GDX’s last major secular peak of $40.87 in mid-April 2022, before that extreme-Fed-rate-hike-driven anomaly!  Popular greed will definitely balloon as major gold stocks carve new secular highs, and a more-spectacular secular breakout unfolds.

Prior to that April-2022 high-water mark, GDX crested at $44.48 in early August 2020.  Astoundingly GDX hasn’t traded above there since way back in late January 2013, well over a decade ago!  Forging above there only requires another 17.3% of rallying from mid-week levels, which is nothing with gold stocks so lagging gold.  You better believe bullish financial-media gold-stock coverage will explode when that happens!

Circling back to financial newsletters, since my job is analyzing gold and its miners’ stocks I don’t have time to dig deeply into mega-cap techs or bitcoin or crude oil.  So I rely on expert newsletter analysts who have long studied those realms full-time.  I can absorb their decades of knowledge and wisdom applied to current markets with some brief reading.  I trust their judgment on their specialized sectors’ sentiment cycles.

In my line of work, I always have CNBC or Bloomberg on in my office.  I also listen in the hours before the markets open when I exercise early in the mornings.  Bullish mainstream financial-media coverage of both gold and gold stocks is definitely growing.  I’m hearing and seeing both discussed more often, with interviewed analysts bullishly seeing higher prices coming.  That record-momentum-chasing dynamic is mounting.

This is one key reason that gold-stock psychological tipping point is nearing.  The more traders who don’t normally follow this sector become aware of its growing gains, the more interested they will get and the more capital they will deploy.  The higher gold stocks rally, the more traders will want to buy them.  That will boost gold-stock gains, driving even more bullish financial-media coverage and increasing trader inflows.

Gold stocks’ sentiment pendulum swinging back through the bottom of its arc toward the greed side will proportionally overshoot.  I wrote a whole essay analyzing this a couple weeks ago.  Back in late February at GDX’s latest low, major gold stocks hadn’t been more undervalued relative to gold since a single day in March 2020’s pandemic-lockdown stock panic!  After extremes reversions don’t stop at means.

That portends a dazzling GDX upside target way up over $59.25 at mid-July gold levels!  That’s nearing GDX’s all-time high of $66.63 in early September 2011.  That was the end of a gargantuan secular gold and gold-stock bull born in April 2001.  Gold soared an epic 638.2% during that, but GDX wasn’t born until the middle.  Yet the similar HUI gold-stock index skyrocketed a life-changing 1,664.4% during that bull!

Today’s gold-stock upleg also remains relatively anemic by recent years’ standards.  Again gold’s last uplegs achieving new-record-high streaks both crested in 2020, averaging 41.4% gains.  GDX averaged 105.4% gains during them, doublings making for better-than-2.5x upside leverage!  Today’s 51.6%-at-best GDX upleg with gold’s up 35.5% is atypically limp, gold stocks have big catch-up rallying left to do.

Another important reason it looks like gold stocks’ psychological tipping point is imminent is the fantastic earnings the gold miners are now reporting.  For this sector as a whole, Q2’24 is going to prove the most-profitable on record by far!  Gold stocks’ fat profits are going to attract plenty of institutional investors who haven’t been paying attention.  Substantial inflows of fund capital should accelerate gold stocks’ upleg.

While it would’ve been better to get deployed when our newsletter subscribers did at recent major lows, it isn’t too late.  Odds are gold stocks’ young bull market has years left to run, and today’s upleg is likely only halfway done.  If you’re interested in learning about this high-flying sector, subscribe to our newsletters and reap my decades of experience and wisdom.  Their trading books are currently full of great gold stocks.

We’ve long specialized in fundamentally-superior mid-tier and junior gold and silver miners, which tend to well outperform the GDX majors in gold uplegs.  With smaller bases, mid-tiers and juniors are better able to consistently grow their production.  They are usually more profitable too, operating fewer lower-cost mines.  Their lower market capitalizations also make their stocks much easier to be bid way higher.

Successful trading demands always staying informed on markets, to understand opportunities as they arise.  We can help!  For decades we’ve published popular weekly and monthly newsletters focused on contrarian speculation and investment.  They draw on my vast experience, knowledge, wisdom, and ongoing research to explain what’s going on in the markets, why, and how to trade them with specific stocks.

Our holistic integrated contrarian approach has proven very successful, and you can reap the benefits for only $10 an issue.  We extensively research gold and silver miners to find cheap fundamentally-superior mid-tiers and juniors with outsized upside potential.  Sign up for free e-mail notifications when we publish new content.  Even better, subscribe today to our acclaimed newsletters and start growing smarter and richer!

The bottom line is gold stocks seem to be nearing a crucial psychological tipping point.  While they have lagged gold’s mighty upleg so far, their gains are increasingly being noticed.  Financial-media coverage is mounting as GDX nears a major secular breakout.  This sector’s sentiment pendulum is on the verge of pushing through the bottom of its arc towards the greed side, where it is due for a huge proportional overshoot.

Traders should increasingly start chasing high-potential gold stocks, accelerating their upleg gains.  They are reporting record quarterly earnings while American stock investors are only starting to return to gold.  So it’s not too late to get informed and get deployed before this sector becomes hot again.  The earlier gold-stock allocations are made, the greater the gains when the herd roars back in to chase this upleg.

THIS ARTICLE ORIGINALLY POSTED HERE.

First, let’s talk about what is happening in the US.

We live in a polarized era where internet algorithms deliver up the content that is uniquely catered to their users, putting them in their own personal bubble. That means that when a person is a big fan of one political party or candidate they will see content negative when it comes to the side they do not like, but rarely do they see content created for that side’s supporters.

As a result, they end up not seeing what that other side is truly up to.

This past weekend, when Joe Biden announced that he was dropping out of the Presidential race he did it on Twitter, instead of going on TV, or issuing a press release to do it. The day after his disastrous debate, the first thing his campaign did was do a few events and put up videos to try to show that Biden was energetic, such as this one at a Waffle House.

@hotfreestyletv When you unexpectedly dap up Joe Biden at Waffle House #joebiden #president #wafflehouse ♬ original sound – Hot Freestyle

The day after Biden resigned from his campaign, the Harris camp told reporters that it was going to spend a lot of time creating meme’s that would boost her campaign. The Harris meme creators called themselves the “KHive” on Twitter.

KHIVE moving into the DNC pic.twitter.com/F8jUI1LRZz

— Aiden, Grey Eagle of the Amarican Steppe (@Aiden_CDN) July 21, 2024

As Axios reported:

“Internet users dug up old clips and created fancam edits of the vice president — including of her dancing and explaining how to prepare a Thanksgiving turkey — which quickly went viral.”

“One particularly viral clip, from 2023, featured Harris telling a story about her mother asking her, “You think you just fell out of a coconut tree?” before adding: “You exist in the context of all in which you live and what came before you.” Countless memes involving coconuts followed.”

The memes multiplied.

Here is an example of one of them:

pic.twitter.com/KJ9xuYq0U3

— Kamala HQ (@KamalaHQ) July 24, 2024

Of course, the Trump team has it’s memes that it is creating too.

Meme’s are propaganda and are powerful propaganda.

As Elon Musk wrote:

Who controls the memes,
controls the Universe

— Elon Musk (@elonmusk) June 26, 2020

The coconut meme looks silly when you watch, and I have no doubt that many Trump supporters will mock it and think they are winning by doing so, but there is something subtle behind it.

why did I stay up till 3am making a von dutch brat coconut tree edit featuring kamala harris and why can’t I stop watching it on repeat pic.twitter.com/hqcmerD1Pb

— ryan (@ryanlong03) July 3, 2024

To understand what is really going on here, you have to turn to the February elections in Indonesia that voted into power General Pabowo Subianto, who ran death squads and concentration camps in East Timor in the 1980’s and 1990’s. He ran what he called “ninja gangs” in a military campaign he called “Operation Eradicate.” He was banned from entry into the United States for war crimes and became a hated figure in his country.

That is until now.

Using memes he refashioned himself as a “cuddly grandpa” and younger people liked that image and voted him into office.

In many of the meme videos he showed himself having fun, and dancing, creating disarming memes that people loved.

@vicenews A former military general with a bloody past, now nicknamed “cuddly grandpa” is poised to become Indonesia’s next leader on his third attempt at running for office—with the help of a huge social media rebrand. 72-year-old Prabowo Subianto—accused of kidnapping protestors in the 90s and once known for his “hot temper,” has amassed over 11 million followers on his social accounts. #indonesia #indonesia #prabowosubianto #influencer ♬ original sound – VICE News

It wasn’t just young people who voted for him, because the General won in a landslide, with 58% of the vote, the biggest election landslide in the history of Indonesia.

At this moment of time the masses around the world just want someone that will comfort them and make them happy and the right memes can position anyone to be that person.

There are two take aways from this:

1)Trump supporters who simply think that Harris is a joke and think that by just mocking her laugh, her appearance, and so forth, because it was easy to do that with Biden, and worked, are probably underestimating her and the power of the Harris memes.

To test this proposition, the Trump social media warrior should watch the Harris coconut video twenty times and see what happens to them.

If they do it they may find that they start to feel that they actually start to like her for no good reason, because with the music, with the repetition, the meme programming does its work. She is dancing and smiling, doing it in this meme video too.

@politicalcoconut Our girl has moves! #kamala #brat #kamalaharrisbrat #khive ♬ Look What You Made Me Do – Taylor Swift

Read the comments to the Tweet, look at the number of likes.

same i relate to her on a deep, spiritual level

— ryan (@ryanlong03) July 3, 2024

2)People think in memes now. It isn’t just that memes are powerful propaganda, but years of social media usage of the past ten years have engineered people’s brains to think in memes, talk in memes, and want more memes.

A result, is a deterioration in discourse to the point where rational thought is drowned out on the internet, and people are geared up to want a strong and powerful leader to obey. The giant online tech companies operate in countries that are dictatorships with no problem at all. Social media is not a danger to authoritarian states, but actually assists them in maintaining power by atomizing individuals and tearing apart civil society, by displacing both with the meme.

But in topsy turvy times, some elites see these as necessary changes to keep the world in order, as everyone deep down knows more chaos is to come. Memes are tools of social manipulation and control and people who spend hours on hours consuming them, which so many online do now, are pruned for more, because they are fun, even if they rot your brain out, just like drinking and drugs do. The problem is there are billions of people who don’t remember what it was like to not think in memes, so they can’t remember what it was like not to think in memetic fashion. They can’t tell you the difference. They have to free themselves by getting off the internet, going on something like a fast to stop consuming social media, which is the last thing the big tech companies, and those that own them, such as Elon Musk, want them to do.

-Mike

Markets are forever cyclical, flowing and ebbing in endless marches of uplegs and corrections within bulls and bears.  Price action is pendulum-like, oscillating between opposing extremes.  Those include high and low technicals, overvalued and undervalued fundamentals, and greedy and fearful sentiment.  Long-term averages reflect the bottom midpoints of pendulum arcs, mean-reversion targets for stretched prices.

But pendulums pulled way to either side don’t stop in the middle once they start swinging back.  Their kinetic momentum carries them well through their midpoints in proportional overshoots to the other side.  Markets dragged to either extreme function similarly, not just normalizing to averages but swinging right through to opposing extremes.  Gold-stock cycles are no exception, and they recently saw an extreme anomaly.

Gold-mining profits are overwhelmingly driven by prevailing gold prices, as mining costs only change gradually.  This is readily evident in the major gold miners included in the benchmark GDX gold-stock ETF.  Their last-reported quarterly results were Q1’24’s, where the top 25 GDX gold miners averaged $1,277 all-in sustaining costs.  Subtracting those from gold’s average price yields a great sector earnings proxy.

In Q1 gold averaged $2,072, so GDX-top-25 profits ran $795 per ounce.  A year earlier in the comparable Q1’23, gold was $1,892 while it cost these elite majors $1,302 to produce.  That made for unit earnings of $589 per ounce.  So during a year where average gold prices rallied a nice 9.5%, the GDX-top-25 majors’ profits surged 34.9%.  This latest real-world example clocked in at excellent 3.7x upside leverage to gold!

Stock prices ultimately reflect some reasonable multiple of underlying earnings, and gold price trends fuel the great majority of gold miners’ profits.  Thus gold stocks have always acted like leveraged plays on the metal they mine.  After painstakingly analyzing the GDX top 25’s latest results for 32 consecutive quarters now, I can sure tell you that takes a ton of work!  But an easy proxy decently reflects this key fundamental link.

It’s simply the ratio between gold-stock and gold price levels.  Charted over time, this shows whether gold stocks are overvalued or undervalued relative to the metal driving their earnings.  For many years I’ve been using the GDX/GLD ratio or GGR variant of this metric.  It divides that leading gold-stock ETF’s daily closes by those of the mighty American GLD gold ETF, the largest physical-bullion-backed one in the world.

The GGR’s positioning relative to recent-year averages is analogous to gold stocks’ valuation pendulum.  That was recently pulled to an exceedingly-anomalous extreme, with the mean reversion now well underway.  Odds highly favor that momentum buying fueling a proportional overshoot, arguing much more gold-stock gains are coming.  In this chart the GDX/GLD ratio in blue is superimposed over the raw GDX in red.

Flagging market extremes is important for trading since they mark major cyclical reversals, the tops of pendulums’ arcs.  The more-extreme any extreme, the greater the likelihood it will spawn a proportional mean reversion and overshoot.  An astounding one happened in late February, when GDX plunged to just $25.79.  That was actually marginally under early October’s $25.91 when gold’s latest upleg was born.

Over a 4.8-month span where gold had powered 11.7% higher in a strong upleg, the leading gold-stock ETF somehow slipped 0.5% lower!  That was insane, as I pointed out to our newsletter subscribers at the time.  Normally major gold stocks amplify material gold moves by 2x to 3x, thus GDX should’ve been up 23% to 35%!  So our newsletters added a bunch of cheap gold-stock trades in February as this anomaly worsened.

On February 28th at that inexplicable GDX nadir, the GDX/GLD ratio collapsed to just 0.137x!  Though an extreme 4.0-year secular low, that understates how anomalous this was.  The GGR had only been slightly lower at 0.133x on one single day in the dark heart of March 2020’s pandemic-lockdown stock panic!  The market fear then was off the charts, as the flagship S&P 500 index plummeted 33.9% in just over one month!

Everything including gold stocks was sucked into that brutal maelstrom of panic selling, as GDX suffered a miserable 38.8% freefall over several weeks.  But that was understandable with stock markets’ VIX fear gauge soaring to challenge 83.  Gold stocks’ mean-reversion overshoot out of that wild extreme was huge, with GDX skyrocketing 134.1% over the next 4.8 months!  Super-low GGRs are phenomenal buying ops.

But there was zero market fear in late February 2024 as the GGR revisited those stock-panic-grade lows, with the VIX under 14.  And if it hadn’t been for that single stock-panic day, this recent GGR low would’ve proven gold stocks’ worst levels relative to gold in fully 8.1 years!  The sheer extremity of this latest gold-stock-valuation anomaly can’t be overstated.  This sector’s cyclical pendulum was stretched to a breaking point.

Indeed the mean reversion since then is gathering steam, with GDX powering 52.3% higher at best as of mid-week.  Our newsletter trades added in February while that extraordinary GGR anomaly festered already have unrealized gains as high as +97%!  But this gold-stock pendulum is only beginning to swing the other way after stretching to 4-to-8-year extremes.  This Tuesday the GGR had merely recovered to 0.172x.

While quite an improvement from late February’s absurd 0.137x, that hasn’t even regained averages let alone swung through to the other side.  The last quasi-normal years for gold stocks were 2019 to 2021.  In 2022 gold and thus gold stocks were crushed by heavy gold-futures selling driven by a monster US Dollar Index rally on the most-extreme Fed rate hikes ever witnessed!  GDX collapsed 46.5% during that.

That horrible carnage left gold stocks deeply out of favor, and more-normal sentiment is only starting to return.  In 2019 to 2021 before all that unprecedented 2022 craziness, the GDX/GLD ratio averaged 0.199x which is a reasonable mean baseline.  GDX would have to rally another 18% from here at mid-week gold prices to mean revert, near $45.25.  But pendulums stretched to secular extremes demand overshoots.

Late February’s epic anomaly was 0.062x under that 2019-to-2021 average, revealing extraordinary gold-stock undervaluation relative to gold.  A proportional overshoot as the pendulum swings back driven by momentum buying portends a topping GGR of 0.261x.  Plug that into mid-week GLD levels, and that yields a GDX upside target above $59.25!  That’s another 54% higher from here, a big rally well worth riding.

Interestingly that would leave GDX’s entire upleg with massive 130.0% gains.  That’s right in line with that last GGR mean-reversion overshoot out of that pandemic-lockdown stock panic when GDX soared 134.1%.  The symmetry of similar GGR extremes yielding similar rebound uplegs is certainly agreeable.  But it wouldn’t surprise me at all if gold stocks do even better, as their setup this time around is uniquely-bullish.

The major gold miners’ latest quarterly results for Q2 are imminent, being reported from late July to mid-August.  As I analyzed in a late-June essay, the gold miners likely achieved record quarterly earnings.  That’s mostly due to dazzling record quarterly-average gold prices, which clocked in at $2,337!  That surged 18.2% YoY, the most since Q4’20.  As I explained then, GDX-top-25 AISCs should come in near $1,325.

That would make for implied Q2 unit profits of $1,012 per ounce.  That’s not only the best ever by far, but would soar 69% YoY!  With the great majority of traders apathetic on gold stocks in recent years and not paying attention, gold miners’ epic earnings should really surprise in coming weeks.  Exceedingly-strong fundamentals ought to start attracting fund investors, resulting in big capital inflows accelerating this upleg.

Also buying begets buying, as speculators and investors alike love chasing upside momentum.  The longer and higher gold stocks rally, the more traders will want to deploy more capital to ride those gains.  That will also generate more-frequent and more-bullish financial media coverage, further expanding awareness of this sector.  This virtuous-circle dynamic is largely responsible for gold stocks’ upside breakout in July.

The resulting buying could persist on balance for a long time.  This chart shows gold-stock valuations have languished in a downtrend for several years now.  Not only was a major reversal all but certain after late February’s extreme lows, the GGR has already surged back up through that entire downtrend channel.  It looks to be breaking out now, laying the groundwork for a new secular uptrend getting underway.

And gold stocks’ upside potential is proportionally boosted by gold’s underlying upleg and bull market still looking like they have a long way to run yet.  After consolidating high mostly between $2,300 to $2,400 in recent months, gold just surged over mid-May’s last record close of $2,424 this week.  Near $2,465 on Tuesday, gold’s total upleg since early October has grown to a mighty 35.5%!  This run has proven remarkable.

Normally powerful gold uplegs are fueled by sequential buying largely from gold-futures speculators and American stock investors.  The latter is evident in the combined physical-gold-bullion holdings of the GLD and IAU gold ETFs, the world’s largest.  Yet during gold’s upleg so far, these holdings have actually fallen 4.5% or 57.2 metric tons!  American stock investors haven’t even yet started chasing today’s gold upleg.

They are entranced by this AI stock bubble, ignoring everything else.  But as that inevitably decisively bursts, the scales will fall from their eyes.  They will marvel at these record gold prices and remember the wisdom of diversifying their tech-stock-heavy portfolios with gold.  Today’s gold upleg is the biggest by far and first to achieve new-record-high streaks since a pair both cresting in 2020, begging to be noticed by all.

Gold uplegs grow to monster size on gold-record momentum.  Increasing buying drives gold higher on balance hitting more traders’ radars.  Record streaks also generate increasing financial-media coverage which grows more bullish.  The faster gold rallies, the more traders want to buy.  The more they buy, the faster gold rallies.  The resulting surging prices attract in the financial media, spreading awareness among traders.

Again today’s mighty 35.5% gold upleg happened despite 57.2t GLD+IAU draws.  Yet that 2020 pair of uplegs soared 42.7% and 40.0%, directly fueled by huge GLD+IAU-holdings builds of 30.4% or 314.2t and 35.3% or 460.5t!  Today’s upleg has mostly been driven by Chinese-investor and central-bank buying, who have done most of the heavy lifting.  That leaves American stock investors big room to flood back in.

It doesn’t matter how big gold’s upleg has already grown, it’ll get a lot bigger on normal differential GLD-and-IAU-share buying.  American stock investors could easily swing their gold investments from about -50t in GLD+IAU-holdings terms to +400t or more!  That portends much more gold upside ahead.  And the higher gold powers, the bigger the ultimate gold-stock gains since gold prices directly fuel their earnings.

While the GDX majors will do great, smaller fundamentally-superior mid-tiers and juniors will fare much better.  They are better able to consistently grow their production from smaller bases.  Their littler stables of mines tend to have lower costs too, boosting their profitability.  Their smaller market capitalizations also make their stocks much easier to bid higher.  Our newsletter trading books are full of great smaller miners.

Successful trading demands always staying informed on markets, to understand opportunities as they arise.  We can help!  For decades we’ve published popular weekly and monthly newsletters focused on contrarian speculation and investment.  They draw on my vast experience, knowledge, wisdom, and ongoing research to explain what’s going on in the markets, why, and how to trade them with specific stocks.

Our holistic integrated contrarian approach has proven very successful, and you can reap the benefits for only $10 an issue.  We extensively research gold and silver miners to find cheap fundamentally-superior mid-tiers and juniors with outsized upside potential.  Sign up for free e-mail notifications when we publish new content.  Even better, subscribe today to our acclaimed newsletters and start growing smarter and richer!

The bottom line is gold stocks are mean reverting relative to gold and due to proportionally overshoot.  Gold-stock prices were recently pounded to exceedingly-anomalous levels not witnessed since the very bottom of the last stock panic.  Gold stocks have enjoyed a strong mean-reversion rebound since.  But they remain well under recent years’ average levels compared to gold, let alone overshooting to high ones.

Gold stocks have an exceptionally-bullish setup supporting much-bigger gains.  Gold miners are about to report their best quarterly results and fattest profits ever, fueling institutional buying.  Meanwhile American stock investors haven’t even yet started chasing gold’s underlying upleg.  Their inevitable return once this AI stock bubble rolls over should drive gold much higher.  The undervalued gold stocks will amplify those gains.

THIS ARTICLE ORIGINALLY POSTED HERE.

From late February to mid-May, the leading GDX gold-stock ETF and benchmark had a good run surging 44.5%!  That amplified gold’s parallel remarkable breakout surge by 2.3x in that span.  On May 20th as gold hit its own latest record high of $2,424, GDX closed at $37.26.  While gold had blasted up to risky extremely-overbought levels, the major gold stocks had not.  I wrote a whole essay analyzing that in early May.

Back then I concluded “…gold’s pullback doesn’t need to suck in gold stocks this time around.  While gold soared to extremely-overbought levels recently requiring a rebalancing selloff, gold stocks sure didn’t. … Gold stocks were merely moderately overbought at their metal’s recent interim high, with little greed or euphoria evident.  Indeed during the couple weeks since, gold stocks have largely defied gold’s pullback.”

“Rallying through most of it, they are consolidating high even at worst.  This outperformance should continue as long as gold’s selloff stays orderly and avoids correction territory.  Gold’s pullback maturing will be a great mid-upleg buying opportunity for gold miners…”  My contrarian take on gold stocks ten weeks ago proved correct.  GDX largely drifted sideways, only suffering a modest selloff by sector standards.

From mid-May to early June, gold’s overall sentiment-rebalancing pullback merely extended to 5.7%.  In roughly that same span, GDX only retreated 11.0% for 1.9x downside leverage.  Normally major gold stocks amplify material gold moves by 2x to 3x, with downside drops sometimes exceeding the upper end of that range.  The gold miners have proven quite resilient, with GDX just slumping to $33.15 on June 13th.

Those sector lows held for the next couple weeks during the heart of gold’s summer-doldrums seasonal lull.  That gold-stock drift could’ve easily persisted into early July, which is peak vacation time for traders.  Yet gold miners surged anyway, with GDX blasting a dramatic 9.2% higher month-to-date as of midweek!  That leveraged gold’s underlying move by a huge 4.5x, revealing rapidly-improving gold-stock sentiment.

My work may have played a tiny role in that impressive shift.  On June’s final trading day, I published a popular essay called “Gold Miners’ Record Quarter”.  It analyzed why their upcoming Q2 results will show the fattest gold-mining profits ever witnessed!  Despite heading into a big holiday week, I was surprised to get unusually-large positive feedback and questions on that from professional investors and fund managers.

Some weren’t aware how fantastically-bullish gold miners’ fundamentals are.  And interestingly all the sector buying in early July came before Q2 earnings season.  The gold miners report quarterlies from three to six weeks after quarter-ends, so late July to mid-August.  Odds are these upcoming epic results will still surprise the large majority of traders.  Record earnings ought to stoke accelerated gold-stock buying.

Back to gold stocks breaking out, again GDX last crested at $37.26 in mid-May.  On the Wednesday-close data cutoff for this essay, GDX challenged that hitting $37.05.  Then Thursday morning before I started writing this essay, the latest CPI inflation data came in cooler than expected sparking a US-dollar slide and gold rally.  GDX surged again on that, running as high as $37.99 midday Thursday as I pen this.

This draft will be finished before Thursday’s close, but a decisive breakout happens when a past high is exceeded by 1%.  That works out to $37.63 on GDX.  So by the time you read this, that key upleg-is-alive-and-well threshold has probably already been exceeded on close.  All this is making for quickly-improving summer-doldrums trading action, as this indexed chart of gold stocks’ gold-bull-year summers reveals.

Here all the market summers from 2001 to 2012 and 2016 to 2024 are indexed to Mays’ final closes.  The red line is the gold-bull-year seasonal average up to 2023, and the dark-blue line is this year’s gold-stock performance.  This chart uses the older HUI gold-stock index, which closely tracks GDX as they include the same major-gold-miner components.  Gold stocks’ summer-doldrums seasonal low tends to hit mid-June.

Entering summer 2024 from overbought levels, gold stocks fell more than usual in early June.  By its mid-month nadir of $33.15, GDX was down 6.1% month-to-date.  But that was still well within gold stocks’ usual summer-doldrums trading range of +/-10% from May’s final close.  Gold stocks mostly ground along near those lows for most of the rest of last month, regaining little ground.  Then they caught a bid in late June.

Recent weeks’ recovery surge has been strong, catapulting gold stocks back over their average levels this time of year.  As of Wednesday, HUI and GDX performance ranked as the 6th best at this point in July out of all 21 of these modern gold-bull years!  And if midday Thursday’s 298.78 HUI levels hold into the close, gold stocks would be up 7.0% summer-to-date.  Their July performance has been outstanding.

Seeing this recent excellent action in context helps illuminate how unusual and impressive it is this time of year.  Before this entire surge when GDX was still under $34 on June 21st, I wrote an essay on gold stocks reloading.  My conclusion then was “…gold stocks are reloading.  They slumped in the summer doldrums like usual, working off serious overboughtness and excessive greed after surging in recent months.”

“Both have been bled off dramatically, spawning a mid-upleg buying opportunity before gold’s autumn rally gets underway.  Given today’s bullish gold and gold-stock fundamentals, this may prove the last chance to buy relatively low for awhile.”  We took that opportunity to refill our newsletter trading books, adding new positions in mid-tier and junior gold miners to replace ones stopped out with big realized gains.

As of Wednesday, those new trades already had unrealized gains running as high as +16.6%.  About 3/4ths of our newsletter trades were added earlier in this gold-stock upleg, with unrealized gains as high as +98.3%!  So smart contrarian traders willing to buy in early before the herd figures out gold stocks are running have already been nicely rewarded.  While those opportunities are over, gold stocks still have big upside.

This chart looks at gold-stock technicals in recent years.  Today’s upleg was born with gold’s back in early October.  But since GDX was crushed slightly under those levels in late February, that’s technically where gold stocks really started running.  This upleg is the latest in a mounting bull-market uptrend since early September 2022.  Yet despite surging strongly recently, today’s upleg remains small compared to precedent.

Again as of Wednesday’s data cutoff for this essay, GDX hadn’t yet bested mid-May’s closing high of $37.26.  At that point GDX had rallied 43.8% over 7.5 months, or 44.5% from late-February’s marginally-lower nadir.  But meanwhile gold’s own underlying upleg since early October had powered a mighty 33.2% higher by mid-May!  Its latest all-time-record close then was just over $2,424, which should soon be bested.

That leaves GDX’s overall leverage across gold’s entire upleg at a pathetic 1.3x, way under that 2x to 3x historical average!  As gold stocks heap big additional operational, geological, and geopolitical risks on top of gold price risk, they have to amplify gold considerably to be worth owning.  Merely to return to historical norms relative to their metal, GDX’s upleg needs to balloon to 66% to 100% gains from early October.

That yields upside targets between $43.00 to $51.75 or so, assuming gold’s upleg has crested.  If gold continues marching higher on balance as it ought to, GDX’s potential rises proportionally.  In my essay last week looking at gold’s doldrums strength, I explained why gold’s fundamentals continue to look so bullish.  Unbelievably American stock investors haven’t even started chasing gold’s mighty upleg yet!

They’re still coming once this dangerous AI stock bubble inevitably deflates sufficiently to free them from its enchantment.  American stock investors’ gold investment can be measured with the combined bullion holdings of the world-dominating GLD and IAU gold ETFs.  Astoundingly during gold’s 33.2% upleg so far, GLD+IAU holdings fell 4.5% or 57.4 metric tons!  American stock investors have been selling during it.

This is an extreme and unsustainable anomaly, unprecedented in this modern gold-ETF era!  Today’s gold upleg is its biggest by far and the first to achieve new-record-high streaks since a pair both peaking in 2020.  New record highs are important as they spawn self-feeding momentum buying.  The more records gold attains the more the financial media reports on it, building awareness to drive more capital inflows.

This record-chasing dynamic ultimately grew 2020’s gold uplegs to monster 42.7% and 40.0% gains!  Those were mostly driven by American stock investors flooding into GLD and IAU shares.  Their holdings soared an enormous 30.4% or 314.2t during the first, then an even-bigger 35.3% or 460.5t during the second!  It is amazing today’s gold upleg has already grown to 33.2% despite that 57.4t GLD+IAU-holdings draw.

Chinese investors and central banks have taken the lead this time, with massive gold-bullion buying that has overpowered American stock investors’ stunning apathy.  But sooner or later all these gold records will attract back the latter, who have colossal mean-reversion buying to do.  That should easily catapult today’s gold upleg well over monster 40% gains.  But even at 40%, GDX should power 80% to 120% higher.

That implies GDX targets between about $46.75 to $57.00, another 26% to 54% above mid-week levels!  And such gains are right in line with sector precedent.  GDX averaged excellent 105.4% gains during gold’s monster 40%+ 2020 uplegs!  And again gold-stock upside targets rise proportionally the higher gold’s upleg extends over 40% gains.  Also these levels are conservative given today’s uniquely-bullish scenario.

Gold stocks’ upside leverage to their metal tends to mount the longer gold uplegs last.  Herd sentiment continues to shift more bullish, attracting in more traders.  Their buying accelerates gold-stock uplegs, ramping interest and convincing more traders to chase big gains.  That fuels powerful virtuous circles of buying begetting buying.  GDX amplified gold’s last record-achieving upleg in mid-2020 by a great 3.4x!

Many gold stocks also remain considerably undervalued fundamentally, with stock prices nowhere near reflecting the fat profits generated by record and near-record gold levels.  Our best-performing new gold-stock trade since late June was sporting a dirt-cheap 9.9x trailing-twelve-month price-to-earnings ratio when we added it!  Great valuation bargains still abound in this long-neglected small contrarian sector.

Those upcoming record Q2 results ought to work wonders for gold-stock awareness among professional investors and fund managers.  Since most traders don’t follow this sector, the colossal profits growth will surprise them.  As gold stocks blast higher on huge earnings, more traders will take notice and join in the buying.  An epic earnings season combined with gold surging back to more record highs is incredibly potent!

So despite gold stocks’ upleg so far, the majority of their gains are almost certainly still coming.  While it was better to buy in lower in recent months like our newsletter subscribers did, it isn’t too late to deploy capital in gold stocks.  We’ve long preferred and specialized in smaller fundamentally-superior mid-tier and junior gold miners.  They are better able to consistently grow their production from smaller bases.

Their market capitalizations are also much lower than the majors’ dominating GDX.  That makes it much easier for capital inflows to bid up their stock prices faster and higher.  Smaller gold miners outperform the larger ones during gold uplegs.  Our newsletter trading books are currently full of excellent ones with big upside potential trouncing GDX’s.  Traders should get deployed before the herd really starts chasing gold stocks!

Successful trading demands always staying informed on markets, to understand opportunities as they arise.  We can help!  For decades we’ve published popular weekly and monthly newsletters focused on contrarian speculation and investment.  They draw on my vast experience, knowledge, wisdom, and ongoing research to explain what’s going on in the markets, why, and how to trade them with specific stocks.

Our holistic integrated contrarian approach has proven very successful, and you can reap the benefits for only $10 an issue.  We extensively research gold and silver miners to find cheap fundamentally-superior mid-tiers and juniors with outsized upside potential.  Sign up for free e-mail notifications when we publish new content.  Even better, subscribe today to our acclaimed newsletters and start growing smarter and richer!

The bottom line is gold stocks are breaking out.  After successfully weathering the summer doldrums with a minor selloff, they’ve surged dramatically in July.  Mid-week GDX was challenging its latest mid-May high, and either just achieved or soon will a decisive breakout beyond it.  That confirms this upleg is alive and well, gold stocks off to the races again.  Their upside potential remains massive despite recent upleg gains.

Gold’s own fundamentals are still very bullish, with American stock investors not yet chasing gold’s mighty upleg.  But they will return as gold increasingly catches their attention.  Meanwhile gold stocks are quite undervalued relative to today’s gold levels, let alone where it is heading.  And the gold miners are on the verge of reporting their best quarterly results on record, which should attract professional investors to this sector.

THIS ARTICLE ORIGINALLY POSTED HERE.