Gold Mining Stocks Look Attractive

Pinnacle Digest writes: Stock market author and Pinnacle Professor, Clif Droke, has identified bullish signals coming from the gold market and gold mining stocks. He explains how gold snapped its 10 year long bull-market over the past 12 months, having gained virtually nothing in that time period - thanks to the intense margin requirement increase imposed last year by regulators (meant to stymie speculation growth in the precious metal). Upon imposing the new margin requirements, many momentum traders and hedge funds left gold for other fast paced asset classes - leaving just the ‘die-hards’ to support the market. Considering the harsh blows dealt to gold, it has held up quite well.

The bullish signals Droke identified came on Friday, the first day of June.  He mentions that “The first day of June witnessed a watershed event for gold from a technical standpoint, however.  An important indicator of gold’s internal condition has registered a very positive reading – the first such reading in years.”

This is the first time since 2008 that Droke’s internal indicator has identified gold as being oversold. For years it has registered a reading of overbought.

Lastly, Droke explains why he believes gold mining stocks are looking even more attractive than the metal itself. As he explains, the assets that rose the most in 2009 and 2010 (gold stocks) have collapsed the most since. And whatever crashes the hardest, typically rises the most. These are welcomed words for junior gold stock investors as they have been absolutely obliterated in recent months.

Click here to read Clif Droke’s article on why we should be bullish on gold stocks.