I'm a contrarian. And that means I love to see a market where the price action is diverging from what I would expect to see—given the prevailing economic or policy conditions, coupled with speculative positioning that's extreme and leaning in the wrong direction—asserts Landon Whaley, editor of The Whaley Report.

The gold market currently has both of these characteristics in spades. And because they are a leveraged play on gold, gold miners will be the best performing sector of the equity market in 2016.

Gold should have been decimated with the Fed’s decision to raise rates but what we’ve seen instead is gold has traded sideways for the last two months and is still trading above its 2010 lows. This price action is extremely constructive from a bullish perspective but hasn’t received a lot of attention.

Gold has been quietly building a solid base between $1,100 and $1,000, which tells me that the market is skeptical of the Fed’s ability to follow through on its rate hike plan and that global growth concerns are undiminished.

The speculative positioning is both extremely bearish and seemingly ignoring the most recent price action. The smart money—mostly hedge funds—have been adding to their short exposure for months now and have never been more short as a group than they are right now.

Commercial speculators, corporations attempting to hedge away the risk of an adverse move in gold, have all but eliminated their short positions, which are at their lowest level in 14 years.

This on its own is an extremely bullish indicator. Coupled with the smart money positioning and you have a powder keg that can ignite a massive rally in gold.

To play this, use Market Vectors Gold Miners ETF (GDX), my Top Pick for aggressive investing in 2016.

GDX could trade as low as $12.50-$13.00 before beginning to move higher. If GDX closes above $15.00 it will be a confirmation signal that this theme is beginning to play out. If GDX closes above $17.00, load the hopper because GDX is headed to $30.00.

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