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Assuming gold does bottom at 1681 or 1631 near term, gold stocks that tend to lead the metal higher will bottom before the metal, writes David Banister on Minyanville.com.

Gold stocks have been riding a recent downtrend, which makes sense during a "wave 2" correction in the precious metal.

If we review the Market Vectors Gold Miners ETF (GDX), we can see a possible triple bottom formation. This one, though, looks bullish for a reversal trade to the upside near term as gold forms a C wave bottom.

This triple bottom looks like a series of higher lows should the 43-44 GDX ranges hold near term. The moving average convergence/divergence (or MACD) line is still trending down, and is in "very oversold territory" similar to the prior two lows that preceded massive rallies.

Below is the GDX long-term chart, which shows what looks like an emerging tradable low:

Click to Enlarge

Ways to play a reversal for the aggressive stock investor include the Direxion Daily Gold Miners Bull 3X Shrs (NUGT), which is a 300% long leveraged ETF based loosely on the GDX ETF (1x).

Of course, the specific timing of entering NUGT is tricky. That said, assuming gold does bottom at 1681 or 1631 near term, note that gold stocks that tend to lead the metal higher will bottom before the metal.

By David Banister, Contributor, Minyanville.com