In researching past equity bull markets, we’ve found numerous similarities between all. Each bull market has three clearly defined phases. The last phase of each bull market is driven by valuation expansion which is made possible through the wall of worry phase in which valuations contract and the weak hands give way to the strong hands. Though the gold stocks may have already bottomed, plenty of fear and despondency persists. However, when one compares the present bull market in the gold stocks to five previous equity bull markets, they should realize that things are on par with the past and the gold stocks are right on track.

The Barron’s Gold Mining index surged from 1960 to 1967. Its wall of worry period lasted from 1968 to the end of 1972. Note that at a bottom in late 1971, the market had made no progress over a six year period. Nevertheless, the gold stocks absolutely exploded thereafter, more than four-fold in only two years. After one final correction from 1974 to 1976, the sector surged higher once again, advancing more than six-fold in four years. We could not find valuation data.

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