The other week I made note that the GDX mining stock ETF had turned up. This ETF had been in a corrective phase since Labor Day, but began to invisibly tick up two weeks ago. This is important, because the action in the big cap stocks tends to lead the action in the metal – meaning the stocks typically rally ahead of the metal.
Yesterday the most important big cap mining stock surged to a new 52-week high. Take a look at the chart of Newmont Mining.
The reason NEM is the most important big cap mining stock is because more institutional investors own it than any other mining stock. To them and many others it is a proxy for the entire mining sector.
Yes – I own NEM. But the question now is will the price of gold follow NEM and breakout too?
Gold’s current resistance point is now $1485. This is the point of the downtrend resistance line on gold and its 50-day moving average. A break of that will signal a rally into the end of the year.
Look for silver to follow. All of this will set the stage for more gains to begin in what has been one of the top sectors of the year – silver stocks – and that means we can look for even more gains to come in my top stock pick for December.
Yesterday after the FOMC meeting I turned on CNBC and saw no talk about gold or silver! None! On Robinhood still not a single stock on the list of 100 most owned stocks is a mining stocks or metals ETF. The masses are totally asleep!
-Mike
