However, Tom McClellan founder of the McClellan Market Report warns that retail investors are still shunning the precious metal.
“Investors are scared too far into their holes to want to get excited again, and that is the type of condition that leads to a long and persistent uptrend for gold prices,” McClellan said in a note.
David Morgan, publisher of the Morgan Report, points out that gold mining stocks show some of the best valuations since late 2008, with GDX holdings trading around 11 times forward earnings.
“Institutional investors and hedge funds abandoned the gold sector over the last year because there was no apparent need for a hedge against inflation or financial accidents, but that can turn on a dime,” Morgan said in a note. “In the meantime, gold miners have cleaned up their act (with) a renewed focus on profit margins and better use of and return of capital to shareholders.”
For more information on gold, visit our gold category.
Max Chen contributed to this article.