Gold Miners: Oppenheimer Says “Top Trade Idea”

| August 15, 2014

Gold miners may finally be getting the wind behind their back.  After plummeting in 2012 and 2013, the Market Vectors Gold Miners (GDX) is up 27% this year.   As you may know, GDX tracks a basket of the world’s top gold miners.  The ETF holds names like Goldcorp (GG), Barrick Gold (ABX), and Newmont Mining (NEM).

This year’s strong performance has analysts at Oppenheimer sitting up in their chair. 

As a matter of fact, the fund company just went bullish on the gold mining industry… 

In a new report, Oppenheimer analysts see substantial long-term upside for gold stocks like Randgold Resources (GOLD) and Royal Gold (RGLD).  What’s more, they see GDX as a top technical play on the gold mining industry.

Speaking of technicals, GDX has bullish formations in both short- and long-term time frames.

Let’s look at the short-term first…

Market Vectors Gold Miners

As you can see in this daily chart, gold miners are breaking higher out of a recent consolidation (green lines). 

If GDX surpasses technical resistance at $27.75- $28.00, it could trigger a massive round of short covering, which would send the ETF even higher.   What’s more, a new round of bullish investors would likely swoop into the industry.

And that leads me to the long-term chart…

Market Vectors Gold Miners

This weekly chart reveals an incredibly bullish inverse head and shoulders formation.  In case you’re unaware, this pattern greatly increases the odds that a particular asset is ready to rebound.

How does it work?

Notice GDX made a new low in late 2013 (the H), but failed to test that low before rallying higher in 2014 (the most recent S).  If GDX can break above the neckline of the pattern (green line), it would help solidify the idea a bullish cycle is about to begin for gold miners.

I have little doubt this chart is why Oppenheimer has suddenly become bullish on the gold mining industry.

How do you capitalize on the situation?

The aforementioned GDX is the easiest way to play a rebound in the gold industry.  Not only does the ETF dilute the risk of holding a single stock, it’s highly liquid and easily tradable.

On the other hand, if you’re looking for the best stocks to play the potential mining industry rally, take a serious look at the Options Profit Pipeline.  This one of a kind options trading service focuses specifically on commodities and companies producing them.

I have a new trade coming out in the very near future…

Until Next Time,

Justin Bennett

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Category: Commodities

About the Author ()

Justin Bennett is the editor of Commodity ETF Alert, an investment advisory focused on profiting from the ebb and flow of important commodities via ETFs. The commodity veteran and options specialist is also a regular contributor to the Dynamic Wealth Report. Every week, Justin shares his thoughts with our readers on a variety of commodity-related topics. Justin is also a frequent contributor to Commodity Trading Research’s free daily e-letter. And he’s the editor of another highly successful and popular investment advisory, the Options Profit Pipeline.

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