Gold Miners Are Flashing a Rare Contrarian Buy Signal

Editor’s Note: Today’s update includes data shared with me by a longtime colleague in the financial markets. Click here to get access to his quantitative analysis, too.

Investors spend a lot of time watching prices. But sometimes the most useful signal isn’t how far an investment has fallen. It’s how thoroughly investors have given up on it…

And that’s exactly what the Gold Miners Bullish Percent Index is showing us today.

You see, the Bullish Percent Index, or BPI, isn’t a price indicator. Instead, it’s more like a census…

It counts the percentage of stocks within a group that are currently registering point-and-figure buy signals.

And when the Gold Miners Bullish Percent Index is at 80, it means 80% of the miners it tracks are technically bullish. But when it falls to 20, only one in five is still holding a buy signal…

And when it approaches zero, virtually every stock in the sector has been knocked down.

That’s important because the BPI doesn’t tell us whether gold miners are cheap based on earnings, reserves, or cash flow.

It tells us how completely investors have abandoned them.

And right now the message is clear: Gold miners are deeply out of favor.

The index fell all the way to zero during the June sell-off and, although it has recovered somewhat since then, it has recently remained near the lower end of its historical range.

That means the overwhelming majority of gold mining stocks are still sitting on point-and-figure sell signals.

Now, that doesn’t guarantee an immediate rally.

But historically, it’s around these levels that the sector begins offering some of its best reward-to-risk opportunities.

When Almost Everyone Has Already Sold

A BPI above 70% generally means most stocks in the group have already been bought.

The trade has become popular, good news has been priced in, and fewer investors remain available to push prices higher.

But a reading below 10% represents the opposite extreme…

Nearly everyone who was inclined to sell has already sold. Expectations are low. Sentiment is awful.

And even a modest improvement in the outlook can force money back into the sector.

But low BPI readings don’t tell us that prices can’t fall any further. They merely tell us the selling process is already extremely mature.

And there’s usually a lot more potential energy in a sector where 90% of stocks are on sell signals than in one where 90% are already flashing buys.

So this isn’t necessarily the moment when gold miners feel safest…

It’s the moment when the potential reward is becoming disproportionately large compared with the remaining downside.

That’s how contrarian investing usually works. The best opportunities rarely arrive with reassuring headlines, unanimous analyst upgrades, and crowds of enthusiastic buyers.

They show up when nobody wants to touch the sector.

Gold Still Has a Rate Problem

There are legitimate reasons gold miners have fallen out of favor…

Inflation remains above the Federal Reserve’s long-term target, and renewed pressure from energy prices has revived speculation that policymakers could raise interest rates again.

Higher rates can create two problems for gold.

First, they increase the return investors can earn from bonds and cash.

Because gold doesn’t pay interest, higher yields raise the opportunity cost of owning it.

Second, tighter monetary policy can strengthen the U.S. dollar.

And because gold is priced in dollars, a stronger dollar generally makes the metal more expensive for buyers using other currencies.

Those concerns have weighed heavily on gold recently.

Futures markets have been assigning a meaningful probability to another rate increase, while gold has retreated from its earlier highs and recently traded below $4,100 per ounce.

And mining companies can react even more dramatically than the metal itself…

A miner’s expenses don’t automatically decline when gold prices fall. It still has to pay workers, buy fuel, move rock, maintain equipment, and process ore.

That means a relatively small decline in the gold price can create a much larger decline in expected mining profits.

But that leverage works in both directions…

Once gold turns higher, every additional dollar above a miner’s production costs can flow rapidly toward margins, earnings, and free cash flow.

And that’s why mining shares can dramatically outperform the metal during a sustained recovery.

Central Banks Are Building the Floor

Interest rates and stronger dollars may remain headwinds, but the long-term demand story hasn’t disappeared…

Central banks continue to view gold as an important reserve asset.

And according to the World Gold Council’s 2026 survey, 89% of responding reserve managers expect global central bank gold holdings to increase over the next 12 months.

Even more telling, a record 45% expect their own central bank to add to its gold reserves. And just 1% anticipate reducing them.

That buying matters because central banks aren’t short-term traders…

They’re diversifying national reserves, reducing dependence on foreign currencies, and protecting themselves against sanctions, geopolitical conflict, inflation, and sovereign debt risk.

They may not prevent every correction, but their continued accumulation creates a structural source of demand beneath the market.

That helps establish a floor under gold and reduces the likelihood that the current weakness turns into a prolonged collapse.

We’ve therefore got an unusual setup…

The short-term environment remains uncertain enough to keep most investors away. But the long-term foundation supporting gold remains firmly in place.

That combination — terrible sentiment and durable underlying demand — is exactly what creates attractive contrarian opportunities.

Two Big Miners to Watch

Investors looking for liquid, established ways to position for a rebound should begin with Newmont Corp. (NYSE: NEM)…

Newmont is the world’s largest publicly traded gold producer, giving investors broad exposure across a diversified portfolio of major mining operations.

More importantly, the business continues to generate an enormous amount of cash even during this period of weaker sentiment.

Newmont produced approximately 1.3 million ounces of gold during the second quarter and generated a record $2.2 billion in quarterly free cash flow.

It finished the period with $9 billion in cash and a net cash position of roughly $3.4 billion, while reaffirming its full-year target of approximately 5.3 million attributable gold ounces.

That financial strength gives Newmont flexibility to fund mine development, repurchase shares, pay dividends, and withstand further volatility.

The second name is Agnico Eagle Mines Ltd. (NYSE: AEM)…

Agnico is one of the highest-quality major producers in the industry, with a concentration of assets in politically stable mining jurisdictions such as Canada, Australia, Finland, and Mexico.

The company expects to produce between 3.3 million and 3.5 million ounces of gold in 2026.

And it entered the year projecting all-in sustaining costs of $1,400–$1,550 per ounce, leaving substantial margins even after gold’s recent retreat.

Agnico is also spending aggressively to extend mine lives and expand its resource base.

Its 2026 exploration and project budget is expected to total roughly $565 million–$635 million.

Now, neither company is immune to lower gold prices, cost inflation, or operating setbacks.

But both offer scale, liquidity, diversified production, and the financial strength to survive periods that could punish smaller competitors.

That makes them sensible starting points for investors who want exposure to a recovery without immediately taking on the risks associated with junior miners.

The Bigger Gains May Be Hiding Under $10

Newmont and Agnico Eagle offer established ways to play a gold mining rebound.

But the largest percentage gains usually don’t come from the industry’s biggest companies…

They come from smaller miners and developers whose resources, production growth, or improving economics haven’t yet been fully recognized by the market.

Those stocks carry more risk. But when gold prices turn higher and capital begins flowing back into the sector, they can move much faster than the majors.

And with the Gold Miners Bullish Percent Index telling us that nearly the entire sector has recently been sold down…

This may be one of the best times in years to begin identifying them.

That’s why we’ve prepared a special report revealing three gold stocks currently trading for less than $10 that we believe could explode higher as this market turns.

These aren’t the obvious names everyone already owns…

They’re smaller opportunities positioned to benefit from the same forces supporting Newmont and Agnico Eagle, but with far more room to run.

Click here to get the full report and discover all three names before the rest of the market realizes the gold mining trade is coming back to life.