1911 Gold Corporation (TSXV: AUMB; OTCQX: AUMBF)
1911 Gold is Manitoba’s Gold Standard - Ready, Permitted and High-Grade 1911 Gold is an Emerging Gold Producer, with Significant Cash Flow Generation and District-Scale Growth Potential
The past two months have been a whirlwind for gold stocks: sharp rallies, flash crashes, V-shaped reversals, and another brutal selloff. The GDX gold-stock ETF hit an all-time high in late January, up more than 30% year-to-date, only to suffer a near-13% single-day plunge. It then staged a V-shaped rebound to fresh records. But selling returned with a vengeance in March, sending GDX down over 30% in just three weeks.
Yet after this extreme volatility, three key signals – technical, seasonal, and fundamental – are beginning to align, suggesting that the coiled spring in gold stocks may be nearing a critical point.
On the technical front, GDX closed January at a staggering 67.4% above its 200-day moving average – the most extreme overbought reading in the ETF’s history. Historical patterns suggest such extreme overbought conditions usually require a meaningful pullback to reset. March’s plunge compressed that premium to just 5% above the 200-day moving average, marking GDX’s least overbought close in 12.7 months.
While current levels do not yet qualify as traditionally oversold (typically defined as 15% or more below the 200-day moving average), a notable pattern has emerged in recent years: gold stocks have often completed their corrections near the moving average rather than breaking below it, before resuming their uptrend. Losing nearly one-third of their value in just three weeks has not only corrected the extreme technicals but also largely flushed out the greed-driven sentiment that built up earlier, clearing room for the next leg higher.
Seasonal factors are adding another layer of support. From mid-March to early June, gold and gold stocks tend to enjoy a spring rally. Historical data show that gold averages a 3.8% gain during this period, while gold stocks exhibit their strongest leverage to gold of the entire year – an average multiplier of roughly 3.1x. This implies that even a modest rise in gold prices could translate into double-digit percentage gains for gold stocks. The average gold price in the first quarter of 2026 has already hit a record $4,873 per ounce, up 17.4% sequentially and 70% year-over-year, laying a solid foundation for the spring seasonal strength.
The most compelling support for gold stocks’ medium-term outlook, however, comes from the miners’ consistently exceptional fundamentals. In the fourth quarter of 2025, unit profits (quarterly average gold price minus average all-in sustaining costs, or AISC) for the top 25 GDX components soared 106.3% year-over-year to a record $2,490 per ounce. That marked the 10th consecutive quarter in which the sector delivered year-over-year profit growth of over 40%.
Looking into the first quarter of 2026, despite seasonal cost pressures from winter production (the northern hemisphere winter typically reduces output and raises unit costs), even a conservative estimate suggests another blowout quarter. Assuming AISC rises to $1,900 per ounce – above the $1,788 midpoint of full-year guidance – and using the actual Q1 average gold price of $4,873, unit profits would come in at approximately $2,973 per ounce. That would represent a near-20% sequential increase and another doubling year-over-year. If this holds, the upcoming Q1 earnings reports (due from late April to mid-May) will mark the 11th consecutive quarter of explosive profit growth for gold miners.
Such strong earnings will push valuation metrics like price-to-earnings ratios even lower. Against a backdrop of broader market weakness (the S&P 500 has fallen about 3.9% year-to-date, while GDX remains up nearly 12%), institutional investors have ample reason to reassess their allocations to this sector.
Risks, of course, remain clear. Gold stocks typically amplify gold’s moves by a factor of two to three. If gold were to roll over into a bear market for any reason, gold stocks would face even greater downside pressure. Currently, GDX has not yet entered oversold territory, meaning the margin of safety is not extreme. On balance, however, extreme overbought conditions have been largely corrected, the spring seasonal window is opening, and explosive fundamental earnings growth provides the firmest support. Whether this coiled spring in gold stocks can truly rebound will ultimately depend on gold’s ability to maintain an upward bias through the ongoing volatility.
