Loading ...Gold Miners’ Q3’16 Fundamentals
Adam Hamilton
Archives
Nov 18, 2016
The gold miners just finished reporting their third-quarter results, which proved very impressive. While this small contrarian sector is now languishing in the doghouse following a brutal post-election selloff, the gold miners’ fundamentals are strengthening. Lower costs and higher gold prices led to surging operating cash flows and profits. The major gold miners are great fundamental bargains for contrarians today.
Gold-stock bulls are among the largest ever seen in all the markets. The flagship HUI gold-stock index skyrocketed 1664% higher over 10.8 years ending in September 2011, trouncing general-stock-market losses of 14% per the S&P 500. Even this year between mid-January and early August, the HUI soared 182% in just 6.5 months! Radical wealth-multiplying upside like that is well worth any psychological price.
And that is extreme volatility in gold stocks, which alternatively soar then collapse. After the election as futures speculators dumped gold hedges, the gold stocks suffered an incredible second mass-stopping event in less than 6 weeks. That took the HUI’s total massive correction to a colossal 36.6% in just 3.3 months! Provocatively mid-bull corrections of this magnitude have been suffered before in gold stocks.
Unfortunately most traders get caught up in the popular fear such enormous selloffs generate, so they flee gold stocks in disgust and don’t look back. That’s tragic, as the deeper the correction the greater the buying opportunity and coming upside as gold stocks inevitably rebound. I’ve always found digging into gold stocks’ fundamentals is a great way to overcome prevailing fear in order to buy low after a massive correction.
cont. http://www.321gold.com/editorials/hamilton/hamilton111816.html