Gold always does what it should do…it just never does it when we think it should. –Richard Russell
Past bear markets in precious metals miner stocks have been vicious since they are last in the production cycle as a commodity producer.
Past history of mining shares….
Unless these past three days are simply window dressing and short covering, then something meaningful may be occurring:
The GDX represents several of the senior gold producing companies. The GDX has under-performed the gold price as represented by (GLD) for about 5 years and especially in the past two years. Note the radical change in the past two days as gold, ironically, fell below the all-in cost to produce an ounce of gold for the majority of mining companies.
Two days is just one sign, but a big one in my opinion. Until after the Fourth of July weekend, the true trend may be revealed since this is quarter end and before a long holiday next week. I am bullish for the long-term in SELECTED, WELL-CAPITALIZED companies. Remember to do YOUR own thinking and correlation is not causation. I have been two to three months early and down 20% so far, but I sense a turn–finally?! Prices are absurd.
Perhaps better to listen to an old pro (albeit biased)
Speaking toward what he’s seeing from the institutional investor community, Rick said, “This is the fourth time in my career that I’ve seen capitulation selling, and it get’s ugly and spasmodic…Last week I was on the East Coast of the United States visiting very large institutional investors, and the level of indecision I saw was absolutely classic of the period right before capitulation—andthis week, right on schedule, we’re getting it. [It’s] truly ugly, but it’s the kind of cleansing the market needs.” (Source: www.bullmarketthinking.com)
Hear interview: 6272013rule
HAVE A GREAT WEEKEND.
PS: if you have a question, please post it in the comments section–my emails are swallowed up.
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