Gold/Mining Stocks STILL The Best Asset Class, YTD

Sure doesn’t seem like it, does it?

Here’s the numbers as of today:

S&P 500:   +1.9%
Russell 2000:  -4.5%
Gold:  +7.6%
HUI miner index:  +9.6%

The sentiment numbers for gold, silver and the mining stocks are almost as low as they were in June 2013 near the bottom of the big, manipulated price correction.   As you can see, the actual performance of gold and mining shares has diverged in a meaningful way from the negativity sentiment indicators.  

This suggests to me that not only is the general investment community bearish on the precious metals, but they are incorrectly bearish.  In other words, although it’s difficult to see what the catalyst will be, the sector is set up to explode higher.  It’s just a matter of when.

While we don’t know what the spark will be, the massive pile of tinder that will catch the spark is growing bigger and drier by the day…

4 thoughts on “Gold/Mining Stocks STILL The Best Asset Class, YTD

    1. I’ll take a stab at it. Interest rates are widely perceived to be on their way up due to fed jawboning. Readers of this blog, being of a higher economic intellect, realize that Belgium = FRBNY.

      In days of old, rising crude prices could be throttled using the interest rate weapon, but not so today. Seeing as coupon payments are in fact a claim on future productivity, it will be impossible for them to rise without blowing up the
      system. Japan is a textbook example of this phenomenon since they import 100% of their crude. Notice the perception management used is similar to what Dave has pointed out today with the hui, as oil is up 1000% since 1998.

      Since gold and silver are money with zero coupon, they are direct competitors with federal reserve notes and must be smashed. As interest rates approach zero, their desperation will increase until the monetary metals finally break free towards infinity (see silver eagle sales).

      Yes, the term “Peak Oil” has been politicized to the extent that it’s now called “Peak Cheap Oil”, but whatever you want call it, it will affect the markets. Knowing this in turn will affect investment strategies as expensive oil chokes the economy. Here’s a great paper on the subject-

      http://www.sustainable.unimelb.edu.au/files/mssi/MSSI-Issues-Paper_AlexanderS_1.pdf

      Thanks again Dave.

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