The Contrarian Edge: 3 Gold Mining Storylines to Follow

Subscribers to Chart of the Week received this commentary on Sunday, September 7.

Take a bow, gold. Gold mining stocks certainly enjoyed bullion’s trek to record highs this week. Below, we’ll take three deep dives into three mining components, all saying the same thing in different ways about the safe-haven asset’s prospects – no pun intended – going forward.

On Tuesday, Newmont (NEM) toppled the +100% year-to-date level and had finished higher in nine of the last 10 sessions. Tuesday’s meager 0.3% gain may not flash, but it came on a day Macquarie downgraded the stock to “neutral” from “outperform.” Anytime a stock shakes off a downgrade like that, you take notice. The only problem is, if you haven’t noticed gold mining stocks by now, it’s probably too late.

Back in late April, we wrote about NEM’s 14-Day Relative Strength Index deep in “overbought” territory. NEM’s RSI eclipsed 80 earlier this week for the first time since late April. Even brushes with 80 in the last month, resulted in weakness. And what happened to NEM the same time its RSI eclipsed 80 back in April? An overdue, profit-taking correction.

Sure enough, on Thursday, the shares retreated back below double 2024’s close. That +100% year-to-date level, or double 2024’s close, could be a very interesting level to watch in the ensuing weeks and months.

Two Friday’s ago, our Option Advisor hit a 100% target on an Agnico Eagle Mines (AEM) October 120 call. This was recommended back in our August issue (so late July the picks went out to subscribers.) The Canada-based gold miner had taken out April and June closing highs, and bears hitting the exits were only going to fan the flames.

But what makes this success story different than most is we extended this closeout date to Wednesday, 9/3 for the September issue. At the time of this extension on Aug. 18, AEM had just snapped a five-day losing streak and was 0.5% higher. But Todd Salamone clearly saw something with the stock and wanted to let it run a little more. Maybe it was the 20-day moving average holding, maybe it was the post-earnings 0.8% gain from late July.

Talking with Senior V.P. of Research Todd Salamone and the trading team, they were adamant that if a stock is positive, they rarely exit anything except for a specific reason like earnings looming in a few days. So, with AEM, the setup still looked good, and Todd stuck to his guns.

This is a textbook example for why you let convexity run.

Last but not least, gold mining ETF SPDR Gold Trust (GLD) has seen a massive influx of September 330 calls. GLD was last seen at $326, an exemplary bull run as a geopolitical hedge, but it’s nonetheless interesting that out-of-the-money (OOTM) calls fly off the shelf the day GLD forms a doji candle on the charts.

Note the purple circle in the chart below, how a near “doji” candle marked high in April 2025 ahead of a four-month pullback/consolidation period before GLD hit another high this month. A bearish outside day candle on Thursday would mirror the two-day candle pattern at the April top.

September 320 calls have also been popular, but it looks like that area has been cleared, forming a bullish rectangle and subsequent green light. More importantly, anytime there’s OOTM activity after a bull run, contrarian investors should take notice.

Thursday and Friday’s weakness offers the most recent example of the gold mining rhythm we’ve seen in 2025. Omnipresent geopolitical uncertainty –let’s face it, Fed fatigue and tariff turmoil aren’t going away anytime soon – drive bullion to gains, gold miners reap the benefits, the sector becomes overbought, and consolidation ensues. Rinse and repeat. Hopefully, the options activity and technical patterns highlighted above drive home one of the safer bets on Wall Street at a time where sure things are on shaky ground.

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