GDX’s Dozen-Year Breakout

The major gold stocks are on the verge of a momentous technical event, a dozen-year secular breakout.  With their leading index just single-digit percentages away, that could happen any day now.  Gold stocks surging to decade-plus highs should generate much bullish financial-media coverage and trader interest.  That will attract more capital inflows into this still-deeply-undervalued sector, accelerating upside momentum.

The GDX VanEck Gold Miners ETF is this sector’s pioneering and dominant benchmark.  Launched way back in May 2006, its first-mover advantage has grown into an insurmountable lead.  GDX’s $14.2b of net assets midweek dwarfs all competitors.  The next-dozen-largest US gold-stock ETFs combined only have $8.2b, with over 6/10ths in GDXJ alone!  That of course is GDX’s little-brother mid-tier gold-stock ETF.

As GDX is in a league of its own, traders overwhelmingly view gold stocks’ performance through its lens.  While you wouldn’t know it with this sector still flying under most traders’ radars, gold stocks are having a great year.  At best in this young 2025, GDX soared 25.4% year-to-date as of last Thursday!  That amplified gold’s own surge by 2.2x, in the normal historical range of major-gold-stock leverage to gold of 2x to 3x.

Nothing attracts speculators and investors like strong upside momentum, which they just love piling in to chase.  They become aware of it through some combination of persistent rallying, big gains, and major highs.  That also attracts more and increasingly-bullish reporting by the financial media, quickly spreading awareness of surging stocks or sectors.  So more traders deploy capital to ride that upside, amplifying it.

Last Thursday GDX surged to $42.51, and this Thursday as I pen this essay GDX is right back up there.  That was its best close since late October, a 3.7-month high.  At that point GDX had powered up 70.2% in the preceding 12.6 months to $44.09, which was a 4.2-year secular high.  That in turn was merely a trivial 0.9% under GDX’s early-August-2020 peak of $44.48.  Any close above heralded a momentous breakout.

To find higher GDX levels than that, we have to go all the way back to late January 2013.  GDX regaining $44.50+ would’ve been an 11.8-year secular high then, and a 12.1-year one now!  Midweek GDX was only 6.6% under that dozen-year breakout.  That’s nothing for high-potential gold stocks, a couple days of good rallying.  GDX soared 4.3% on November 18th, 4.2% on January 2nd, and 4.0% on January 30th.

I’ve long preferred to look for decisive breakouts, closes 1%+ above previous ones.  That helps weed out unsuccessful challenges such as double-toppings.  GDX’s psychologically-huge secular breakout would become decisive over $44.92, which we may as well round to $45.  The major gold stocks forging over those GDX levels ought to really accelerate a popular sentiment shift back to bullish, attracting big buying.

There are four points I’d like to discuss about GDX’s imminent dozen-year breakout today.  How bullish sentiment shifts fuel huge gold-stock gains, the perspective from GDX’s current technicals, why that long-awaited secular breakout failed in late October, and why gold stocks will almost certainly punch through this time around.  There’s a great recent illustration of how fast traders’ perceptions of miners can change.

One of GDX’s smaller holdings is SSR Mining, and you’d be hard-pressed to find a more out-of-favor gold stock until recently.  Just over a year ago, disaster struck SSRM’s second-largest gold mine in Turkey.  A heap-leach pile of crushed ore on a hill catastrophically failed, burying nine miners who tragically died!  I can’t remember a worse loss of life in a modern gold mine, and Turkey’s government swiftly shut it down.

That news hitting in mid-February 2024 was apocalyptic even before missing employees were reported.  SSRM’s stock cratered 53.7% that day, plummeting as much as 61.3%!  That very morning, SSR Mining had just issued full-year-2024 guidance, projecting midpoint gold production of 455k ounces.  But with that crippled mine offline since, SSRM only managed to mine 275.0k ounces in 2024 for a huge 40% shortfall.

Not surprisingly SSR Mining was damaged-goods most of last year.  Its stock did grind higher, but was only trading at $5.28 in early November compared to $9.72 the day before that tragedy.  But SSRM has taken off like a rocket in 2025, soaring 52.3% YTD!  In early December it bought another gold mine to bring back growth, then in mid-January a review of that failure implied little negligence on SSR Mining’s part.

That heap-leach pad was constructed to specifications provided by a third-party engineering firm, which were flawed.  They overestimated the shear strength of the liner.  While that won’t bring back the dead miners, it increases the odds Turkey’s regulators will allow that mine to reopen sooner rather than later.  So SSRM has gone from zero to hero among gold-stock traders, their herd sentiment can shift to bullish fast.

SSR Mining’s meteoric recovery was partially enabled by this year’s big sector gains evident in GDX.  The major gold stocks have quickly regained nearly 6/7ths of the losses in their recent sharp selloff.  This strong upside momentum is already winning new converts, enticing more traders to deploy capital in this sector.  Note the small difference between GDX’s current levels and that $45+ decisive dozen-year breakout.

As a super-volatile high-potential sector, it’s easy to get lost in all the day-to-day gold-stock noise.  But realize the major gold stocks have been powering higher on balance in a nice bull-market uptrend since way back in late-September 2022!  GDX has gradually carved both higher lows and higher highs in that secular span, getting ever-closer to that key dozen-year breakout.  It is inevitable if this uptrend persists.

And there’s certainly no reason it shouldn’t with gold’s own extraordinary monster upleg continuing to advance to more nominal records.  Gold stocks are highly levered to gold prices, as they overwhelmingly drive miners’ profits.  Since mining costs are largely fixed before construction when mines are planned, they only tend to climb gradually.  That enables higher gold prices to fuel much-higher earnings for miners.

This is easy to illustrate with hard data.  For 34 quarters in a row now, I’ve painstakingly analyzed the latest operational and financial results of the 25 largest GDX gold miners.  The latest reported numbers are Q3’24’s, which I discussed in a popular mid-November essay.  Q4’24’s earnings season is just getting underway this week, but won’t be finished for another month or so.  I can’t wait to dig into those new results.

Back in Q3’22 when gold stocks’ latest bull market was born, the GDX-top-25 gold miners averaged all-in sustaining costs of $1,405 per ounce.  That quarter gold averaged $1,727 on close, implying sector unit profits of $321 per ounce.  Fast-forward to that last-reported quarter of Q3’24, and the GDX top 25’s AISCs averaged $1,431.  Those merely edged up 1.8% through this bull, highlighting mining costs’ static inertia.

Yet average gold prices in Q3’24 soared 43.5% over this span to $2,477.  That catapulted GDX-top-25 implied unit profits a staggering 225.7% higher to $1,046 per ounce!  That enormous earnings growth amplified gold’s gains by a huge 5.2x!  It’s essential to realize that gold stocks’ massive upside leverage to their metal isn’t just a sentimental thing, it is driven by hard underlying fundamental profits growth.

All stock prices throughout broader markets ultimately gravitate to some reasonable multiple of their own corporate earnings, and gold stocks are no exception.  The gold miners are earning money hand-over-fist in this higher-gold environment, yet traders haven’t recognized that and revalued them.  Odds are GDX’s imminent dozen-year breakout will really help close that shocking unsustainable anomaly plaguing this sector.

So why didn’t that happen back in late October when GDX was so darned close at $44.09?  Two events scuttled that last attempt, the world’s largest gold miner somehow reporting disappointing Q3 results and an overdue rebalancing gold selloff.  Newmont is the biggest gold miner, producing a staggering 1,668k ounces in Q3’24.  It is the only gold miner in the S&P 500, also commanding GDX’s top weighting at 12.7%.

With NEM effectively 1/8th of this leading gold-stock ETF, it has an outsized impact on GDX’s fortunes.  And thus how traders perceive this sector as a whole, since GDX is gold stocks’ dominant benchmark.  In late October Newmont reported its full Q3 results after the next day’s close following GDX hitting $44.09.  Given its size and dominance, NEM is often the only gold miner many institutional investors bother watching.

The day after NEM’s Q3 results, its stock crashed 14.7% which was its worst down day in 27 years!  That slammed GDX 2.6% lower on a day gold rallied 0.7% nearing another record close.  I analyzed NEM’s Q3 debacle in depth in mid-November’s GDX-Q3-results essay.  In a nutshell, Newmont had been guiding to lower AISCs all year long while reporting higher ones.  So investors expected those to come down as forecast.

In order to hit previously-reiterated guidance for its AISCs to average $1,400 through 2024, NEM would have needed Q3 and Q4 together to average just $1,300.  Yet the Q3 actual came in at $1,611, which shot up 13.0% YoY!  The rest of Newmont’s Q3 results were great, with revenues, earnings, and operating cash flows soaring 85%, 484%, and 64% YoY!  But that huge miss on mining costs rattled fund investors.

If even mighty Newmont couldn’t keep AISCs under control in the best of times for gold miners with its vast economies of scale, how would smaller miners fare?  Thanks to NEM’s cost struggles, GDX plunged 5.9% over the six trading days after late October’s $44.09 close.  Gold climbed 1.4% in that span, achieving two more nominal record closes.  But gold was really overextended, so a rebalancing selloff was overdue.

I predicted that and explained the reasons why in an early-October essay on gold’s high selloff risk.  Gold had rallied too far too fast, hitting extremely-overbought territory which had warned of past sharp selloffs.  And the gold-futures speculators whose hyper-leveraged trading often drives much gold price action also had extreme excessively-bullish positioning.  Their upside bets on gold were the fifth-highest on record!

So gold’s monster upleg needed to take a breather, and it did.  Those gold-futures guys watch the US dollar for their main trading cues, and it was soaring with Trump’s odds of winning.  Currency traders were betting another Trump presidency would convince the Fed to slow its young rate-cutting cycle, leaving higher dollar yields.  Specs dumped their huge gold-futures longs as the dollar soared, hammering gold lower.

Gold stocks are ultimately leveraged plays on gold due to how their profits work, so they amplify both its upside and downside.  Gold’s pullback was pretty mild considering that backdrop, merely 8.0% into mid-November.  With their metal selling off, the gold stocks fell in sympathy like usual.  While GDX only lost 10.5% during gold’s pullback, its wider selloff ballooned to 23.4% over 2.3 months for 2.9x downside leverage.

Had Newmont’s Q3 AISCs not been so high and disappointing, GDX probably would’ve achieved $45+ in that last week in October.  But even if it had, the major gold stocks would’ve been sucked into gold’s subsequent selloff at their usual 2x-to-3x leverage.  That’s simply the way this sector has always worked.  So maybe we’re lucky GDX’s dozen-year-breakout didn’t happen then, as it would’ve failed with gold soon after.

But gold stocks’ setup to punch through very soon here is much more favorable today.  Gold is overbought again, stretched 14.8% above its baseline 200-day moving average as of midweek.  But that remains shy of extreme levels starting at 15%+, and way under late October’s exceptional 18.3% over.  Speculators’ gold-futures positioning today is also considerably-less-extreme, as evident in their long contracts held.

Good perspective on that is evident in their trading range through gold’s extraordinary monster upleg, which has now grown to epic 61.3% gains over 16.5 months without a single 10%+ correction!  Back in late October when gold and gold stocks previously peaked, total spec longs were still 92% up in after hitting 100% in late September.  Yet in the latest-reported futures data, that metric merely ran 75% in mid-February.

So if gold doesn’t roll over into another sharp selloff, gold stocks still have big room to run from here.  Yet ironically Newmont could torpedo gold-stock sentiment again.  I’m penning this essay Thursday like usual, to be published early Friday.  Yet after Thursday’s close, NEM is releasing its full Q4’24 results which I won’t see before this draft is finished!  If they either impress or disappoint, NEM could really move GDX Friday.

Newmont’s perpetual mismanagement has saddled this sector with so much deadweight for decades now I don’t have high hopes.  Yet NEM has disappointed on AISCs for so many quarters in a row now that it ought to be due for a downside surprise on mining costs.  I debated not doing this essay this week with Newmont reporting Q4 between writing and publishing.  But good NEM results could catapult GDX over $45!

Newmont’s flailings aside, the rest of the gold miners as a whole will soon report their best quarter ever!  I forecasted these upcoming Q4’24 sector earnings in depth in a late-January essay.  That revolves around those same GDX-top-25 gold miners’ implied unit profits.  In Q4 gold averaged $2,661 on close, another glorious record trouncing Q3’s previous $2,477.  GDX-top-25 AISCs averaged $1,315 in Q1, Q2, and Q3.

Plenty of these gold miners have guided to lower mining costs in Q4, with some predicting their lowest AISCs of 2024!  But for conservatism’s sake, let’s assume they climb to $1,350.  That would make for sector unit profits of $1,311 per ounce, a dazzling new record skyrocketing 99% YoY!  That’s nothing new for gold miners, with unit profits soaring 87%, 42%, 35%, 84%, and 74% YoY in the preceding five quarters.

All stocks eventually migrate towards some reasonable multiple of their underlying corporate earnings, including gold miners.  This overlooked-and-neglected sector remains deeply-undervalued relative to mining profits, an extreme valuation anomaly that can’t and won’t last.  This is easy to illustrate on many fronts, here are a couple.  Back in Q3’22 when these gold and gold-stock bulls were born, GDX averaged $25.29.

In the last fully-reported quarter of Q3’24, GDX averaged $37.86 which was 49.7% higher.  Yet again GDX-top-25 implied unit profits skyrocketed 225.7% in that span!  Gold stocks are way behind, and need to mean-revert far higher.  Gold’s monster upleg since early October 2023 is again clocking in with huge 61.3% gains.  Historically GDX amplifies gold miners’ metal by 2x to 3x, arguing for 123% to 184% gains!

Yet during the exact span of gold’s extraordinary upleg, GDX is only up 57.8% as of midweek for dismal 0.9x leverage.  Today’s gold upleg is the largest since a smaller 40.0% monster cresting in August 2020, at that $44.48 GDX needs to best for its dozen-year breakout.  GDX skyrocketed 134.1% during that last huge gold upleg for great 3.4x upside leverage!  This recent gold-stock underperformance is unsustainable.

The potent combination of gold grinding higher to more record closes, phenomenal Q4’24 earnings from gold miners, and the leading gold-stock benchmark decisively breaking out to rare 12.1-year highs ought to greatly accelerate a major bullish sentiment shift.  Major new highs and record profits should really boost bullish financial-media coverage, greatly expanding trader awareness and capital inflows into gold stocks.

If you’re not deployed ahead of this, you really need to be.  Fortunes will be won as gold stocks revalue much higher.  Our newsletters are currently full of fantastic mid-tier-and-junior gold-stock trades.  These smaller gold miners are better able to consistently grow their production than the majors dominating GDX, often at lower more-profitable mining costs.  So their stock prices really outperform GDX when traders return.

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.

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The bottom line is the dominant gold-stock benchmark is nearing a dozen-year secular breakout, with GDX just single-digit-percentage gains away.  Major new highs boost bullish financial-media coverage, growing traders’ awareness of hot sectors.  That motivates them to deploy capital to chase strong upside momentum, accelerating the gains.  Gold stocks are nearing that psychological tipping point of self-feeding buying.

They remain deeply-undervalued relative to prevailing gold prices, needing to revalue dramatically higher.  The gold miners are starting to report their best quarter ever, record earnings making for six in a row of skyrocketing profits.  So fantastic underlying fundamentals justify much-higher gold-stock prices, this isn’t just a momentum-sentiment thing.  Traders getting in earlier stand to make fortunes as gold stocks soar.

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