Gold stocks just soared to a big technical breakout, mirroring and amplifying their metal. Like gold, its leading miners’ ETFs had spent months winding ever tighter in a bullish chart pattern known as a falling wedge. Those usually resolve in strong reversals and upside breakouts, portending resuming bull runs. That’s likely today, as gold miners’ technicals, sentiment, and fundamentals all support much-higher stock prices.
Interestingly there are only 17 gold-stock ETFs trading in the US, a small number considering this sector’s long decades of outperformance and the epic proliferation of exchange-traded funds. For comparison, SpaceX which just went public in mid-June already has 25 single-stock ETFs dedicated to it! And of all the gold-stock ETFs, only two really matter. They are of course VanEck’s GDX and GDXJ which led the way.
GDX dominated by large major gold miners was the first, birthed way back in mid-May 2006. Its $25.4b in net assets midweek represent nearly 2/3rds of the total capital in all US gold-stock ETFs! A few years later in mid-November 2009, GDXJ was launched as a junior-gold-stock ETF but later became overwhelmingly stuffed with mid-tier gold miners. Midweek GDXJ accounted for another 1/5th of gold-stock-ETF capital.
GDX and GDXJ have never surrendered their big first-mover advantages, now commanding over 5/6ths of all capital American stock investors have deployed in gold-stock ETFs! The only other gold-stock ETF worth mentioning is iShares’ RING, which is a distant third near 1/18th of the total. While most analysts including me focus on GDX for obvious reasons, GDXJ has always tended to outperform its big brother.
Smaller mid-tier and junior gold miners are fundamentally superior to the majors. They mostly run smaller stables of one to four gold mines, so any expansions or mine-builds majorly boost their production. That makes them far better at overcoming depletion and consistently growing. Their mines also tend to be lower-cost and more profitable, and their stocks’ smaller market capitalizations make them easier to bid higher.
For over a quarter-century, I’ve specialized in trading smaller mid-tier and junior gold stocks and writing financial newsletters analyzing gold which overwhelmingly drives its miners’ fortunes. When I saw gold and gold stocks blast higher Wednesday shattering their falling wedges, I knew I had to write about these big breakouts. But instead of viewing them through the GDX lens like most analysts, I am using GDXJ today.
GDXJ handily bests GDX, the mid-tiers and juniors amplifying gold more than the majors. But while these GDXJ numbers are bigger than GDX ones, this following analysis also applies to GDX. Gold stocks’ midweek soaring and breakout is a very-bullish technical development portending much-bigger gains to come. In last week’s essay on gold’s bullish falling wedge, I predicted a major breakout before it came to pass.
In the annals of technical analysis, falling wedges are bullish reversal patterns defined by downward-sloping converging trendlines. Their upper resistance falls much faster than their lower support, carving lower highs and lower lows. The lower highs reflect mounting technical damage and resulting growing bearishness eroding motivation to buy after longer-and-larger drawdowns. That sure sounds familiar, eh?
Yet the much-more-slowly-retreating lower lows on lower volume as falling wedges mature also reveal waning selling pressure. Early in major drawdowns relatively-many-more traders have relatively-much-more capital deployed and aggressively flee as prices fall. That frontloads overall selling, leaving less selling firepower later which gradually diminishes then exhausts. Falling wedges show fading selling momentum.
Eventually as falling wedges’ resistance and support lines near convergence, buyers regain the upper hand over dwindling sellers fueling upside breakouts. Short-covering plays a role if they are particularly violent like Wednesday’s gold-stock one. And these falling-wedge breakouts also start quickly reversing bearish psychology, with traders taking notice and starting to return to chase that new upside momentum.
All this just happened in gold stocks. This GDXJ chart of recent years clearly shows the decisive upside breakout from a massive falling wedge this year that had resulted from a huge gold-stock bull shooting near-parabolic. You couldn’t ask for a more textbook-perfect resolution of all that, which is playing out right on script. If you’ve been waiting for a gold-stock buy signal after all this year’s carnage, this is it!
Gold stocks are ultimately leveraged plays on the metal they mine, which overwhelmingly drives their profits and thus stock prices. From early October 2023 to late January 2026, gold skyrocketed 196.4% higher in its biggest cyclical bull ever in dollar terms! During that extraordinary 27.8-month span, GDXJ soared 387.9% which actually underperformed. That near-quintupling merely amplified gold’s gains by 2.0x!
The majors dominating GDX normally leverage material gold moves by 2x to 3x, while the mid-tiers and juniors are closer to 3x to 4x+. Gold stocks really lagged gold’s monster record bull run in recent years for a variety of reasons beyond the scope of this essay. But partly because even at their peak they were nowhere near reflecting gold, this sector still has big upside potential which this breakout should start unleashing.
GDXJ’s previous record close of $146.20 which stood for fully 15.2 years was all the way back in early December 2010. That wasn’t bested until the day before GDXJ initially peaked in late January 2026 at $150.42. GDXJ then plummeted with gold on January’s final trading day, its 13.6% crash ranking as its third-worst day ever! But over the next month, smaller gold miners roared back to an even-better $156.19 high.
Then Trump inexplicably launched his foolish ill-fated war with Iran, leading to gold’s backward war trade and serious drawdown out of its popular-speculative-mania-like peak. But consider the wild fundamental implications of GDXJ barely achieving new record highs 15 years later in Q1’26! In mid-May I wrote an essay on the GDXJ-top-25 mid-tiers’ Q1’26 results, which proved their most-profitable quarter ever by far.
GDXJ’s 25 largest components averaged all-in sustaining costs of $1,436 per ounce in Q1, which was far under its record $4,873 average gold price. That made for epic record implied unit profits of $3,437 for the smaller mid-tier and junior gold miners! Yet GDXJ was still merely trading at similar prices to where it had been in late 2010. Gold averaged just $1,370 in Q4’10, and the gold miners were earning radically less.
For 40 quarters in a row now, I’ve been painstakingly analyzing the latest financial and operational results of both the GDX-top-25 and GDXJ-top-25 gold miners right after each earnings season. I’ve started work on brand-new Q2’26 results, which are going to prove this sector’s second-best ever! Once they’re all released, I’ll share the analyses in new essays over the next couple weeks. Earnings seasons are fascinating!
My deep research of gold miners’ quarterlies only extends back to Q2’16, way after GDXJ’s longstanding record close in December 2010. And all-in sustaining costs weren’t even introduced until June 2013. The leading AI LLMs wouldn’t give me consistent credible answers to variations of the prompt “What were the GDXJ gold miners’ average cash costs in Q4 2010?” And ferreting that out manually might not be possible.
It would involve trying to find GDXJ’s composition way back then, then painstakingly digging into 10-K and 10-Q reports and other countries’ equivalents which likely aren’t all available on the internet any more after extensive mergers. But hazarding a guess, in Q4’10 the equivalent to AISCs at best was probably half prevailing gold levels. That estimates smaller gold miners earned $685 per ounce or 50% profit margins.
Fast-forward to Q1’26, and the GDXJ top 25 again earned a record $3,437 per ounce for incredibly-fat 71% profit margins! Yet GDXJ’s average close in Q1’26 of $156.19 was only 22.2% better than Q4’10’s $127.84 despite radically-higher earnings. Today’s takeaway relevant to GDXJ’s big falling-wedge breakout is fundamentals continue to support way-higher stock prices. Gold stocks’ bull is nowhere near mature.
After gold’s monster record cyclical bull to its most-overbought levels in a staggering 45.9 years, a serious reckoning was necessary to rebalance technicals and sentiment. As I warned in early February, gold’s next-ten-largest cyclical bulls in dollar terms averaged subsequent big-and-fast drawdowns of 20.8% in just 2.1 months! And like usual the gold miners’ stocks would leverage any material selloff in their metal.
Gold initially plunged a very similar 18.6% in 1.8 months into late March, which GDXJ amplified with an ugly 32.9% plummeting in 0.7 months! Remember since gold stocks didn’t fully reflect gold’s bull, they continued rallying for a month after its near-parabolic peak. Gold’s drawdown would later extend to 26.3% over 5.5 months by mid-July, exacerbated by irrational Fed-rate-hike fears. That pounded GDXJ even lower.
In mid-July it plunged as low as $91.66 on close, extending smaller gold miners’ total selloff to a brutal 41.3% over 4.7 months! That hammered GDXJ way back to just 79.6% of its baseline 200-day moving average, the most oversold this leading sector metric had been in a long 3.7 years since early November 2022! Realize that was nearly a year before gold’s monster record bull got underway, a serious secular low.
Back in late January as gold threatened to shoot parabolic, GDXJ had skyrocketed a crazy 73.3% over its 200dma. That made for mid-tiers’ and juniors’ most-extreme-overbought close since early August 2016 fully 9.5 years earlier! So the subsequent serious reckoning confined within this massive falling wedge reversed smaller gold stocks hard from nearly-decade-high overboughtness to nearly-four-year-worst oversoldness.
Such a colossal reversal naturally gutted herd sentiment, which collapsed from wild bullishness in late January to universal bearishness in mid-July. As smaller gold stocks hemorrhaged over 4/10ths of their value in less than five months which is undeniably miserable, speculators and investors increasingly fled. The resulting fear and apathy are ideal for a major bottoming, corroborating this falling-wedge breakout.
As I concluded last week regarding gold’s parallel falling wedge, “...chart pattern alone isn’t enough to compel aggressive buying. Yet supported by bullish sentiment, technicals, and fundamentals, it adds to the case gold’s next major upleg will soon be underway. The more bullish factors aligning after a long and deep selloff, the greater the odds it will soon reverse.” That had really-bullish implications for gold stocks.
My final sentence read “As gold’s falling wedge yields to a decisive persistent rally, battered gold stocks will soar.” Then Wednesday gold blasted 4.1% higher to $4,245 on no apparent catalyst! Some analysts credited a modest miss in that morning’s ADP report on US private-sector jobs, but the timing doesn’t line up. Nearly 4/5ths of gold’s entire gains that day had already accrued overnight before ADP hit the wires!
After that gold actually retreated from about $4,210 pre-ADP to $4,190 45 minutes later. War news probably wasn’t a factor either. Iran and Oman were negotiating to reopen the Strait of Hormuz under Iran’s full control imposing tolls, which the US vehemently opposes. So it wasn’t like some big deal had just been signed. And Wednesday wasn’t a risk-on day either, with the S&P 500 slipping 0.2% while gold soared.
Big overnight buying mounted despite no driving news, as gold’s falling-wedge breakout likely motivated technically-oriented gold-futures traders to chase it. As gold blasted higher into the US trading day, gold stocks dutifully followed amplifying its gains with a huge 7.4% GDXJ up day! That ranks in the top 1% of all GDXJ days ever, quite significant in the grand scheme. It made for a super-decisive falling-wedge breakout!
I define decisive as 1%+ beyond a technical trendline. As the chart above shows, gold stocks’ falling wedge had wound so tight its upper resistance and lower support had nearly converged. Had GDXJ just edged slightly above resistance, it wouldn’t have been decisive and no one would’ve noticed. But that 7.4% surge Wednesday utterly shattered resistance, leaving that breakout glaringly obvious and indisputable.
Smaller gold miners’ technicals, sentiment, and fundamentals all support much-higher stock prices. The latter will become far more apparent after the currently-underway Q2 earnings season wraps up in mid-August. Over the next couple weeks I’ll be wading through all the new GDX-top-25 and GDXJ-top-25 quarterlies, and can’t wait to see what they reveal and then analyze and share it in my next couple essays.
But when writing about major technical reversals, the irony of how most traders treat them never escapes me. The worst times to buy gold stocks are after they’ve already skyrocketed and everyone is super-bullish, like in late January. Succumbing to popular greed and euphoria to buy really high is foolish, and always ends in serious losses in inevitable subsequent drawdowns slamming technicals and gutting sentiment.
The best times to buy gold stocks are when those major selloffs are maturing, like these last couple months. So we’ve been aggressively adding smaller fundamentally-superior gold miners with great near-term production growth coming in our subscription newsletters, despite much challenging gold chop. Yet when traders should be most interested in buying low, they’ve bearishly capitulated mostly fleeing this sector.
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The bottom line is gold stocks just achieved a big technical breakout. Both the miners and their metal rocketed higher midweek on no news, shattering the upper resistance of parallel massive falling-wedge chart patterns. These huge decisive upside breakouts herald recent years’ powerful bull runs resuming. Bullish technicals are confirmed by bombed-out bearish herd sentiment and spectacular fundamentals.
This is especially evident in the smaller mid-tier and junior gold miners comprising GDXJ. Earlier this year it finally bested 15-year-old records despite radically-higher gold-miner earnings. In the past five months it has swung from nearly-decade-high overboughtness to nearly-four-year-extreme oversoldness. And the smaller gold miners are now reporting their second-best quarterly results ever. What a time to buy!
Adam Hamilton, CPA
August 7, 2026
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