How Far Is Too Far for Gold Stocks?

GET METALS NEWS THAT MATTERS

Long-term charts provide insights…

Bullion.Directory precious metals analysis 13 August, 2025
By Przemysław K. Radomski
Founder of GoldPriceForecast.com

My recent gold price forecast for August 2025 included a detailed analysis of the current analogy between now and the 2011 top, and this link remains up-to-date, especially with regard to mining stocks’ strength.

Consequently, in today’s analysis, I’d like to focus on the two key things:

1. What gold is doing – especially compared to the situation in the USD Index.

2. How far is too far in the case of mining stocks.

Let’s start with the latter, as given today’s early upswing in GDX and GDXJ, it seems that this might be what you’re most interested in.

In short, THIS – the current prices – is the “too far” in case of both mining stock ETFs.

The GDX ETF just moved to its all-time high. The 2011 high was $58.93. This month’s intraday high is $58.81, and several extra cents could be added to the ETF value any minute now.

This is an extremely strong resistance level that is being reached here, and it’s very unlikely that the market would be able to push through it without declining first.

Sure, breakouts happen. But let’s keep in mind all the points that I’ve been making in the previous analyses – about the link to 2011, as well as the situation in the USD Index – but we’ll get to that shortly.

While the GDX ETF is reaching its 2011 top, the GDXJ is reaching its 50% retracement based on the 2011 – 2016 decline.

Quoting my August 7 comments on the above chart:

“This is as red-alert situation as it gets.

Even if GDX was to rally another $1 here and reach its 2011 high, it would create an incredibly bearish setup for a massive decline in the following days/weeks.

Back in 2011, it took just several days for GDX to slide $10. In case of GDXJ, this could amount to a $15 decline. “

Why would the GDXJ be likely to decline more?

Because it’s been weaker the whole time, and even now, as the GDX moved to new highs, GDXJ didn’t.

Let me be frank – on a very short-term basis, we could still see some temporary gains – up to $59 in GDX (the 2011 high) and perhaps even $74 in GDXJ (the 50% retracement), but neither of them has to be reached for the declines to start.

(…)

Especially that gold once again encountered its previous highs and it once again moved above its 78.6% Fibonacci retracement level.”

Indeed, the moves to $59 and $74 in GDX and GDXJ, respectively, are taking place, and it likely means that the final tops are in or that they are being formed as I’m writing this (or as you are reading this).

And speaking of gold’s 78.6% Fibonacci retracement – I previously commented that the breakout above this level was likely to be invalidated, and that’s exactly what happened.

What’s truly remarkable, however, is that during the last several days, gold first declined sharply when the USD Index moved higher, and when the USD moved back down, gold almost completely ignored it.

This is gold, pretty much screaming into our ears that it wants to decline and that it wants to decline soon. This kind of relative performance is not something we see often.

Sure, every now and then, gold is weaker or stronger relative to the USD, but not to this extent. This is rare, and this is meaningful.

Combining this with the very strong similarity to the 2011 top and the extremely strong resistance that the mining stocks just reached, points to only one likely scenario – bigger declines in the following weeks.

Still, IF the unlikely happens and GDX confirms its breakout above its previous highs, my subscribers are prepared to buy specific four gold stocks that would likely provide the biggest bang for the buck.

This article was originally published here

 Previous Post

Tariff Threat Makes Gold Market Go Haywire

Next Post  

Economics Professor: Gold Price Could Double in Next Decade