I found this analysis very convincing:
https://thebull.com.au/could-a-gold-stock-reversion-be-due/
“The more contrarians buy in low, the faster gold stocks bounce out of extreme lows. The stronger that inevitable mean-reversion rebound grows, the more additional capital this sector attracts. This powerful virtuous circle of buying begetting buying is what fueled gold stocks’ big-and-fast 45% and 42% rebounds out of those anomalous lows in the summers of 2002 and 2009. That magnitude of mean reversion fits today.”
......“This technical and sentimental case for a massive gold-stock mean reversion higher is bullish enough to stand on its own. If this were the entire story, this left-for-dead sector would be a screaming buy right now. But interestingly the fundamental case for regaining much-higher gold-stock prices is actually even stronger. The gold miners also happen to be deeply undervalued relative to today’s prevailing gold prices! Stock prices ultimately have to normalize to reflect some reasonable multiple of underlying corporate earnings. The economics of this industry are simple, average gold prices less average production costs drive profitability. ”
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