The gold miners as represented by the GDX have been pushed to the breaking point with yet another ‘bear flag’ forming just a few percent above crucial long-term support:
To put the situation into perspective, GDX is barely more than 10% above the 2008 panic lows despite the fact that gold is more than $400/oz higher than where it was in late-2008. A breach of the above area of support (highlighted in green) would essentially mean that investors are pricing in zero profitability for the gold mining sector for some time to come.
Such a decline would be quite ominous given that most of the senior gold producers which constitute the GDX have an all-in sustaining cost per ounce of gold of ~$1,000.
The gold miners have been pushed to the brink, another bear flag breakdown would send share prices to depths that were once thought of as unfathomable. However, such a washout could be just the right medicine needed to finally put a bottom in place for this much maligned sector.