Gold stocks have radically outperformed every other sector in the stock markets this year, blasting higher as investors flock back to gold. This powerful surge is spawning worries that gold stocks’ new bull run is in danger of exhausting itself. But such fears are totally unfounded. A longer-term perspective reveals that gold stocks’ baby bull market in 2016 remains tiny in the grand scheme. This new bull has barely begun.

Successfully buying low and selling high to multiply wealth in the markets demands traders overcome their own innate greed and fear. These ever-present emotions are constantly warring in traders’ minds, impairing their judgment. One consequence of heeding these dangerous emotions is the tyranny of the present. Traders naturally tend to overweight the present and forget the past, which leads to poor decisions.

If gold stocks are considered over the past few months alone, it’s easy to see why the magnitude of their run would be concerning. As of the middle of this week, the flagship HUI gold-stock index had rocketed 64.7% YTD compared to gold’s +19.0% and the benchmark broad-market S&P 500’s -0.8%!  Any move of this magnitude reeks of severe overboughtness, and looks utterly unsustainable after rallying too far too fast.

And that’s not the worst of gold stocks’ performance conundrum. Between mid-January and this week, the HUI had skyrocketed 81.9% higher to gold’s +16.1% and the S&P 500’s +7.8%! That’s certainly an astounding 1.9-month run.  Normally when any price soars so far so fast, a sharp downside reckoning is inevitable and imminent. But gold stocks’ situation leading into this incredible bull run was anything but typical.

And gaining perspective on that bigger picture is crucial to suppressing the greed and fear that always cloud traders’ judgment. While gold stocks’ monster bull run looks excessive in the context of the last few months, it remains surprisingly little when framed by past years’ price action. The gold stocks’ new bull market is still a tiny baby, with vast sentimental, technical, and fundamental room left to mature into a juggernaut.

For all gold stocks’ sound and fury this year, they’ve actually regained very little ground. This first chart looks at gold-stock price action as rendered by the HUI since early 2015.  All gold stocks have managed to accomplish technically so far this year is to reverse last year’s anomalous selloff.  Just this week, the HUI finally clawed back to where it would’ve been if epically-bearish sentiment hadn’t crushed it in 2015.

Between autumn 2014 and spring 2015, the gold stocks were grinding higher on balance above pre-breakdown support. From October 2014 to May 2015, the HUI averaged 177.1 compared to gold’s own average of $1207 over that span.  But in early June, gold stocks started breaking down and this support line failed.  And since the gold stocks weren’t following gold lower, that breakdown looked seriously anomalous.

Last June, the HUI plunged 10.2% to gold’s mere 1.5% drop. That’s extreme 7.0x leverage to gold, far beyond the typical 2x to 3x exhibited by gold stocks. After intensely studying this June breakdown on a day-by-day basis in real-time as it happened, I think it was purely psychological. The S&P 500 had just carved a dazzling new all-time record close in late May, extending its cyclical bull to +215.0% over 6.2 years.

With the stock markets seeming to do nothing but rally indefinitely thanks to the Fed’s extreme easing, investors felt no need to diversify their portfolios with gold.  American stock investors were continuing to liquidate their GLD gold-ETF shares, forcing its holdings down to new bear lows.  And with gold looking doomed to grind lower indefinitely, there was no incentive to buy gold miners dependent on gold for profits.

The heavy gold-stock selling accelerated into a free fall in the heart of the summer doldrums in mid-July. Late one lazy Sunday evening, a futures speculator slammed through an enormous 24k-contract gold-futures short sale. This trade was brazenly timed and executed to run stops on the long side of the hyper-leveraged gold-futures market. It was a manipulation intended to shatter gold’s years-old major support.

And this record gold-futures shorting attack succeeded, blasting gold $48 lower to $1086 within a single minute!  Back then there was a universal-but-false perception that the gold-mining industry just couldn’t produce gold at less than $1200 per ounce. So with the gold miners believed to be seriously impaired fundamentally, the HUI plunged to a brutal 13.0-year secular low in early August. Gold stocks were despised.