November 26th, 2023, Mining Stocks — Unpopular Yet Promising

Florian Grummes
Published in
5 min readNov 27, 2023


As the price of gold continues to flirt with the psychological resistance of USD 2,000, having gained a respectable 8.3% over the past year, mining stocks have failed to yield returns.

Performance in USD, weekly chart as of November 23rd, 2023. Source: Florian Grummes, GOLD.DE

In fact, the VanEck Gold Miners ETF “GDX” is down 1.38% since the beginning of the year. Industry giants such as Newmont (-24%) and Barrick Gold (-8.9%) have experienced significant pullbacks. Even the well-managed Agnico Eagle is down 7.43%. A notable exception is the Canadian mid-tier producer Alamos Gold, boasting a significant gain of 31.5% thanks to robust growth, consistent dividends, and strong management.

Mining stocks with ample upside potential

Gold in USD vs. HUI in USD since January 2000, as of November 13th, 2023. © Reuters Eikon, Incrementum AG, Ronald-Peter Stöferle

For those who have held the HUI (NYSE Arca Gold BUGS Index) since its all-time high in September 2011, the investment is down by 65%! In contrast, the current gold price is approximately USD 65, or 3.4%, above its previous all-time high of USD 1,920.

Once again, mining investors must grapple with the bitter lesson that mining stocks are not equivalent to gold and often do not make sound long-term investments. While physical precious metals allow investors to weather normal market fluctuations, rising production costs, significant management errors, geopolitical shifts, political changes in various jurisdictions, shareholder dilution, geological challenges, and dwindling liquidity in the mining sector often result in declining or, at best, sideways-moving stock prices.

Markets ignored positive news and good drilling results

On top, positive news and drilling results have largely been ignored by the market this year, punishing well-managed companies that meet their targets. Unfortunately, rapid declines of 30% to 50% are possible at any time in the narrow mining sector, without necessarily indicating a deterioration in the fundamental situation of the respective company. Small exploration companies, in particular, are highly speculative at present, struggling to access much-needed capital and, in some cases, facing dire financial situations.

GDX seasonality, as of November 23rd, 20023. Source:

However, during a sector-wide recovery and especially in phases of exaggeration, a significant amount of capital can suddenly flow into the narrow mining sector. This influx can lead to steep increases and doubling, or even tenfold increases, in the values of smaller stocks.

Currently, the mining sector must endure the final weeks of “tax-loss selling.” However, by mid-December at the latest, the seasonal indicators are expected to be excellent until the end of February. Consequently, the unpopular mining stocks could present a promising investment over the next three to approximately four months, backed by a surging gold price.

GDX in US-Dollar — Weekly Chart

GDX in US-Dollar, weekly chart as of November 24th, 2023. Source: Midas Touch Consulting

Similar to the silver price, the GDX has been moving within a large triangle for almost four years. Until today, the sharp rise from spring 2020 is being consolidated. Currently, the ETF is grappling with the resistance zone of around USD 29 to USD 31. A breakthrough would initially open up space to around the upper edge of the triangle in the range of approximately USD 33 to USD 34.

GDX in US-Dollar — Daily Chart

GDX in US-Dollar, daily chart as of November 24th, 2023. Source: Midas Touch Consulting

On the daily chart, the five-month pullback in the GDX ended on October 4th with a total decline of 29.3%. The recovery has been modest so far, and the GDX is still trading below its slightly declining 200-day moving average (USD 30.17). However, the recent formation resembles an inverse head and shoulders pattern. Only the breakout above the neckline (approximately at USD 30.15) is needed for final confirmation. Subsequently, the ETF would need to gain approximately 10% to 12% from current levels to start the break out from this pattern.

For the gold price, the rather bullish setup in the GDX is promising. Many analysts expect a failure at the USD 2,000 mark, yet this does not align with the inverse head and shoulders formation in the mining ETF!

Conclusion: Mining Stocks — Unpopular Yet Promising

Another challenging trading year is slowly coming to an end for mining investors. While the spring rally initially brought euphoria and inflated expectations, the correction since early May has further humbled the disparaged sector. However, the best seasonal period is approaching rapidly. Hence, a recovery can be expected soon with the waning of tax-loss selling. Particularly in January and February, mining stocks tend to experience robust price increases.

If gold can successfully surpasses the USD 2,000 mark shortly, gold and silver mining stocks are likely on the verge of a renaissance. Initially, medium and smaller gold producers present a very favorable risk/reward-ratio, as their profit margins soar with a rising gold price and act as a strongly positive lever on their balance sheets. Many of the smaller exploration companies could easily double by spring, too. But a total revaluation may occur much later in the cycle or only when the major producers embark on an acquisition spree.

Analysis initially published on November 24th, 2023, by Translated into English and partially updated on November 26th, 2023.

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Disclosure: This article and the content are for informational purposes only and do not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision. The views, thoughts, and opinions expressed here are the author’s alone. They do not necessarily reflect or represent the views and opinions of Midas Touch Consulting.