Are Gold Miners Predicting an Upswing in Gold Prices?
Over the past couple of days, the price of gold has been heading slightly downward. In fact, bears might argue that because the price of gold has been trading below $1,300 per ounce for a couple of days that we can expect additional downward price action in the gold price.
However, I think it might be time to look at the market from a different perspective — that is, we should be looking at gold mining shares.
While gold has been selling off, the exact opposite has been taking place in the gold mining stocks. If we look at the largest gold miner ETF, the Market Vectors Gold Miners ETF (NYSEARCA:GDX), we see that the prices of these stocks have been incredibly strong over the past couple of days. Since hitting a low of about $23 per share on Monday afternoon, this fund has traded up to $24.50, a more than 6 percent return.
This price action is extremely positive, especially since the Market Vectors Gold Miners ETF made a low at the same level toward the end of March. This means that we could be looking at a double bottom in the gold miners, which means that more aggressive gold traders are betting on a rise in the gold price.