Gold Stocks’ Spring Rally ‘25

By Adam Hamilton, CPA

Interest in gold stocks is really mounting, fueled by gold’s record-shattering monster upleg.  Traders are rediscovering this high-potential contrarian sector, just driving major gold stocks to a dozen-year secular breakout.  The miners are earning massive record profits, their fundamentals have never been better.  All this is happening as gold’s spring rally gathers steam, when gold stocks achieve their best seasonal leverage.

Seasonality is the tendency for prices to exhibit recurring patterns at certain times during the calendar year.  While seasonality doesn’t drive price action, it quantifies annually-repeating behaviors driven by sentiment, technicals, and fundamentals.  We humans are creatures of habit and herd, which naturally colors our trading decisions.  The calendar year’s passage affects the timing and intensity of buying and selling.

Gold stocks display strong seasonality because their price action amplifies that of their dominant primary driver, gold.  Gold’s seasonality generally isn’t driven by supply fluctuations like grown commodities see, as its mined supply remains relatively-steady year-round.  Instead gold’s major seasonality is demand-driven, with global investment demand varying considerably depending on the time in the calendar year.

This gold seasonality is fueled by well-known income-cycle and cultural drivers of outsized gold demand from around the world.  Like clockwork these power major autumn, winter, and spring seasonal rallies in gold and thus its miners’ stocks.  Interestingly market forces behind the latter are the least-understood out of all gold’s seasonal surges.  Maybe that’s why this imminent spring rally has also proven gold’s weakest.

Yet paradoxically gold stocks still enjoy their best seasonal outperformance relative to their metal during these same coming months!  So gold stocks’ spring rally has proven their strongest seasonal one during gold’s modern bull-market years.  This contradictory mismatch between gold’s worst seasonal rally and its miners’ best one offers an important clue on the spring rally’s motivating impetus, sentiment is likely the key.

Traders’ psychology exceedingly influences their capital-allocation decisions.  They won’t buy gold or gold stocks or anything unless they are optimistic prices will climb on balance.  After dark cold winters in the northern hemisphere where the vast majority of the world’s traders live, spring naturally breeds optimism.  Its glorious swelling sunshine and warming temperatures universally buoy the spirits of pretty-much everyone.

The lengthening daylight hours and improving weather from March to May bring joyful anticipation of the summer vacation season.  That’s such a wonderful contrast to January and February, which often seem like nose-to-the-grindstone months of relentless busyness.  With things looking up and traders generally feeling happier during springs, their optimism makes them more bullish on much including gold and gold stocks.

This glass-half-full sentiment leaves traders more willing to deploy capital to chase expected gains.  And their optimistic buying feeds on itself, fueling virtuous circles of strength.  The more traders buy gold and its miners’ stocks, the more they rally.  Those resulting gains attract in still-more traders, accelerating the upside.  Spring is exceptionally-favorable for nurturing this positive psychological feedback loop in markets.

Since it is gold’s own demand-driven seasonality that fuels gold stocks’ seasonality, that’s logically the best place to start to understand what’s likely coming.  This old research thread focuses on modern bull-market seasonality, as bull and bear price action are quite different.  Gold enjoyed a mighty 638.2% bull run from April 2001 to August 2011, fueling gold stocks skyrocketing 1,664.4% per their leading HUI index then!

Following that secular juggernaut, gold consolidated high then started correcting into 2012.  But the yellow metal didn’t enter formal bear territory down 20%+ until April 2013.  That beast mauled gold on and off over several years, so 2013 to 2015 are excluded from these seasonal averages.  Gold finally regained bull status powering 20%+ higher in March 2016, then its modest gains grew to 96.2% by August 2020.

Another high consolidation emerged after that, where gold avoided relapsing into a new bear despite a serious correction.  Later the yellow metal started powering higher again, coming within 0.5% of a new nominal record in early March 2022 after Russia invaded Ukraine.  So 2016 to 2021 definitely proved bull years too, with 2022 really looking like one early on.  Then Fed officials panicked, unleashing market chaos.

Inflation was raging out of control thanks to their extreme money printing.  In just 25.5 months following the March 2020 pandemic-lockdown stock panic, the Fed ballooned its balance sheet an absurd 115.6%!  That effectively more than doubled the US monetary base in just a couple years, injecting $4,807b of new dollars to start chasing and bidding up the prices on goods and services.  That fueled an inflation super-spike.

With big inflation running rampant, Fed officials frantically executed the most-extreme tightening cycle in this central bank’s history.  They hiked their federal-funds rate an astounding 450 basis points in just 10.6 months, while also selling monetized bonds through quantitative tightening!  That ignited a huge parabolic spike in the US dollar, unleashing massive gold-futures selling slamming gold 20.9% lower into early September.

That was technically a new bear market, albeit barely and driven by an extraordinary anomaly that was unsustainable.  Indeed gold soon rebounded sharply, exiting 2022 with a trivial 0.3% full-year loss.  Gold kept on powering higher, reentering bull territory up 20.2% in early February 2023!  So I’m also classifying 2022 as a bull year for seasonality research.  Gold’s modern bull years include 2001 to 2012 and 2016 to 2024.

Prevailing gold prices varied radically across these secular spans, running just $257 when gold’s mighty 2000s bull was born to March 2025’s latest record high of $3,046.  That vast range of gold levels spread over all those long years has to first be rendered in like-percentage terms in order to make them perfectly comparable with each other.  Then they can be averaged together to distill out gold’s bull-market seasonality.

That’s accomplished by individually indexing each calendar year’s gold price action to its final close of the preceding year, which is recast at 100.  Then all gold price action of the following year is calculated off that common indexed baseline, normalizing all years.  So gold trading at 110 simply means it has rallied 10% off the prior year’s close.  Gold’s previous seasonality before 2024 was averaged in is shown in light blue.

This modern-gold-bull-year average now encompasses fully 21 years, solidifying it with big inertia against change.  Yet 2024’s outsized upside gold action proved so remarkable that it still pulled gold seasonals considerably higher.  Last year gold soared 27.2%, doubling its prior-20-bull-year average gains of 13.7%!  That boosted seasonals from the light-blue line to the dark-blue one, elevating average annual gains to 14.4%.

With a stellar track record like that through 21 of these last 24 years, gold truly should be one of the more-popular investments.  Every investor should have a 5%-to-10% portfolio allocation in gold, the ultimate portfolio diversifier often moving counter to stock markets!  But after being enthralled by the AI stock bubble in recent years, American stock investors’ collective gold portfolio allocation is still effectively zero!

Mid-week just under record gold prices, the combined gold-bullion holdings of the dominant GLD and IAU gold ETFs were worth $131.4b.  Yet the total market capitalization of all S&P 500 stocks ran $51,421.6b.  That implies a trivial gold allocation of just 0.26%!  American stock investors have barely even started chasing gold yet, their huge capital inflows are still coming.  A reallocation even to 1% or 2% will take years.

While sentiment, technicals, and fundamentals are gold’s primary drivers, seasonals act like headwinds retarding gold action or tailwinds bolstering it.  Seasonally gold has long enjoyed three distinct rallies occurring in autumn, winter, and spring.  From 2001 to 2012 and 2016 to 2024, they clocked in at average gains of 5.2%, 7.6%, and 3.8%.  Gold’s spring rally tends to run from mid-March to early June, it’s just starting.

While usually the weakest of the three, gold’s spring rally is already way outperforming in 2025.  Between gold’s latest interim low at the end of February to mid-March, gold has already blasted 6.7% higher!  Like last year, major central-bank buying still appears to have the helm.  American gold-futures speculators had actually been larger net sellers for five weeks, only resuming buying in mid-March as gold challenged $3,000.

And forging above that psychologically-huge big-round number is super-bullish!  Such breakouts generate much-more and much-more-bullish financial-media coverage, which greatly boosts traders’ awareness a sector is hot.  So they increasingly rush to chase those gains, which their big capital inflows accelerate.  This drives a powerful virtuous circle of higher prices fueling more buying growing gains attracting more traders.

This self-reinforcing fear-of-missing-out upside-momentum-chasing dynamic can lead to massive spring-rally gains.  Today’s monster gold upleg has soared 67.4% higher in 17.5 months without a single 10%+ correction!  Monster status starts at 40%+, and this is gold’s first upleg of that magnitude since back in 2020.  That year from mid-March to late May, gold blasted up a huge 18.7% in this spring-rally timeframe!

With its spring-rally-2025 gains a bit over a third of that so far, gold still has big room to keep running.  Continuing strong central-bank demand and American stock investors increasingly returning with the AI stock bubble bursting will likely prove the main drivers.  A similar spring rally this year from gold’s latest interim low in late February would catapult it up over $3,385!  That would spawn great gold-stock excitement.

Their leading GDX VanEck Gold Miners ETF tends to amplify material gold moves by 2x to 3x.  But only birthed in May 2006, GDX is too young for this long-term seasonal analysis.  For that we need the classic HUI gold-stock index which is functionally interchangeable with GDX, containing the same major gold miners.  If gold continues powering higher this spring as it ought to, the gold stocks should surge dramatically.

Rather enigmatically, gold stocks’ spring rally is their strongest seasonal one despite being gold’s weakest.  Miners naturally follow the metal their profits leverage, so they too have seen three distinct autumn, winter, and spring rallies.  Over these last 21 gold-bull years, they have clocked in with average gains of 8.2%, 10.4%, and 12.0%.  Those make for upside leverage to gold of 1.6x, 1.4x, and an awesome 3.1x.

Amplifying gold, gold stocks’ spring rally also tends to run from mid-March to early June.  That’s 2.6 months or 11.4 weeks, a considerable span.  Today we’re just a couple weeks into that usual spring-rally timeframe, and gold stocks are really outperforming.  Between GDX’s latest interim low in late February to mid-March, it has already soared 14.6% higher!  That was compressed within the first 1/6th of this spring rally.

When gold surges in the spring, gold-stock gains can grow enormous.  In spring 2020 during gold’s last monster upleg, GDX nearly doubled with a colossal 95.8% gain!  That was an extreme outlier, emerging from March 2020’s pandemic-lockdown stock panic.  But excellent gold-stock gains are likely by early June this year as gold continues powering higher.  Historically major gold miners have tripled gold’s upside.

Again gold is up 6.7% at best so far in 2025’s spring rally, and gold-stock upside leverage to gold has averaged 3.1x in this seasonal span.  So if gold’s recent gains grow to 10% to 15%, GDX ought to blast up 31% to 47%!  Those are big, fast gains well worth riding.  And these spring-rally seasonal tailwinds are just icing on the cake.  Gold miners’ sentiment, technicals, and fundamentals support way-higher prices ahead.

All three of these primary drivers are intertwined and really bullish today.  Just last week, GDX achieved a decisive secular breakout to its highest close in 12.2 years!  I predicted that and explained why it was so important back in a late-February essay on GDX’s dozen-year breakout.  Speculators and investors alike love piling into upside momentum to chase winners, as bullish financial-media coverage of them soars.

The higher sectors rally, the more-bullish traders grow on them.  That increasingly motivates them to deploy capital, with their buying accelerating the gains.  That in turn fuels more bullishness and buying.  While sentiment and technicals are important, gold miners’ fundamentals are phenomenal.  A couple weeks ago in another essay I analyzed the GDX-top-25 gold miners’ latest Q4’24 results, which were epic.

Subtracting gold miners’ quarterly-average all-in sustaining costs from quarterly-average gold prices yields a fantastic proxy for sector unit profitability.  Last quarter that soared 78% YoY to an all-time-record $1,207 per ounce!  And that was no flash in the pan.  Over these last six reported quarters ending in Q4, GDX-top-25 implied unit profits have skyrocketed fully 87%, 47%, 35%, 84%, 74%, and that 78% YoY!

Gold miners’ earnings are so huge at these lofty prevailing gold prices that valuations have collapsed to deeply-undervalued levels.  Plenty of gold stocks are now trading at single-digit or teens trailing-twelve-month price-to-earnings ratios, astoundingly-cheap!  And this long trend of colossal earnings growth isn’t done.  Conservatively in this almost-over Q1’25, the GDX top 25 are tracking near $1,400 profits up 76% YoY!

There have been plenty of spring-rally years where gold stocks’ sentiment, technicals, or fundamentals weren’t congruent with bullish seasonals.  That usually leads to below-average spring-rally performances.  But holy cow all the stars are aligned for 2025’s spring rally!  This one has great potential to grow into one of the better or best.  The underlying linchpin is gold breaking decisively over $3,000 for the first time ever.

Global central-bank demand remains strong, and American stock investors are increasingly starting to chase gold’s monster upleg.  Major gold stocks just broke out to dozen-year highs, while reporting record revenues, earnings, operating cash flows, and per-ounce profits!  While gold-stock gains are mounting, they still have a long ways to go to normalize stock prices with massive underlying earnings.  Talk about bullish!

In our subscription newsletters, we’ve been adding fundamentally-superior smaller mid-tier and junior gold miners since gold’s last pullback bottomed in mid-November.  Their unrealized gains have already grown as large as +65% midweek.  But many of these great gold stocks could easily still double or triple before reflecting reasonable multiples of their underlying corporate earnings!  Their spring-rally upside potential is huge.

Expertly-picked individual gold-stock trades added relatively-low way outperform GDX, which has always been burdened by deadweight supermajors.  Damningly as gold soared 27.2% in 2024, GDX merely eked out a terrible 9.4% gain for horrendous 0.3x leverage!  Yet the 84 mid-tier and junior gold-stock trades we realized in our newsletters last year averaged +43.1% annualized gains!  Better gold stocks fare way better.

That will prove true again in 2025’s spring rally.  If gold ultimately surges 10% to 15% driving 31% to 47% GDX gains, smaller fundamentally-superior gold miners could double those.  While it’s not too late to add positions, gold stocks soar quite fast when they really start running.  So the window to buy in relatively-low for this year’s spring rally is closing.  As always the biggest gains will be won buying in ahead of the herd.

This last chart carves up average gold-stock seasonals into more-granular calendar months using this same indexing methodology.  April and May are two of gold stocks’ best months of the year, highlighting the spring rally’s strength.  Over this past quarter-century, there’s been no-more-important two-month period to be heavily-long gold miners’ stocks!  When everything aligns, these next two months’ gains can be big.

From 2001 to 2012 and 2016 to 2024, major gold stocks’ best four months of the year have been May, November, April, and December.  HUI and thus GDX have clocked in with hefty 3.8%, 3.5%, 2.9%, and 2.7% average gains in these calendar months, making for upside leverage to gold of 4.3x, 1.8x, 1.7x, and 1.8x.  Note how much of an outlier May in particular is, often seeing gold stocks soaring far ahead of gold!

After advancing this seasonality research thread for decades now, I really believe general spring optimism is the underlying psychological reason.  When traders are optimistic, they are way more likely to be bullish on stocks and buy in.  And who in the northern hemisphere doesn’t love spring’s warming temperatures, longer daylight hours, brighter sunlight, and joyful anticipation of the imminent summer vacation season?

I sure do, my family and friends do, and everyone I’ve ever discussed this with does.  Unfortunately the great majority of investors are emotionally-driven, buying when they feel good and selling when they feel bad.  Only battle-hardened speculators can eventually overcome their own greed and fear.  This spring-rally timeframe is the most-optimistic time of the year in general, which affects seasonality across many markets.

Gold stocks enjoy their fastest seasonal rallying of the year during spring.  Again they’ve averaged 12.0% gains between mid-March to early June, a 2.6-month span.  Annualized that equates to a 54.9% rate of ascent!  These next couple months are the most-favorable time of the year to be heavily deployed in the gold miners.  Whether due to general spring optimism or something else, gold stocks tend to really thrive.

With the lion’s share of this seasonally-strongest span still coming, it’s a great time to boost your portfolio allocations in fundamentally-superior mid-tier and junior gold miners.  They are in the sweet spot for big upside potential as gold powers higher.  These smaller miners offer a unique mix of sizable diversified production, great output-growth potential, and smaller market capitalizations ideal for outsized gains.

The bottom line is gold stocks usually experience a strong spring rally seasonally.  This is driven by gold’s own seasonality, where outsized investment demand arises at certain times during the calendar year.  Gold usually enjoys a solid spring rally likely fueled by the universal optimism this season brings.  And since gold drives its miners’ profitability, their stock prices naturally follow gold higher amplifying its gains.

That infectious spring exuberance has proven very potent for gold stocks.  Over the last quarter century of gold-bull years, the miners have outperformed their metal dramatically from mid-March to early June.  No other seasonal surge rockets so fast!  And given 2025’s unique setup with gold and gold stocks breaking out big combined with gold miners’ epic record earnings and cheap valuations, this spring rally ought to be huge.

Adam Hamilton, CPA

March 28, 2025

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