Gold fell with stocks on Friday, which was disheartening. Today that changed; gold gained alongside the US dollar while stocks fell. Of course, gold and greenback rarely rise together. It can happen, but it requires some kind of pervasive fundamental rationale. Today that rationale was good old safe haven buying.
I think what is happening is a run-of-the-mill bull market correction. Those often entail losses in the 10 to 15% range, so we're only halfway there (hold onto your hats!). If that is the case, it's a good thing. A correction would really strengthen the bull market's base, giving it the foundation to continue for a while yet.
And as metals investors, we want that. The big bull argument for commodities right now depends on coordinated economic growth; a stock market crash would derail that.
A correction would also do much to shift perspectives on how to invest at this stage of the game. This bull market has been so long and strong that FOMO - Fear Of Missing Out - has become the primary investment rationale. A real correction will encourage investors to instead fear the day when the market turns down for real, which is a more pertinent focus at this stage of the bull market.
That shift would encourage safe haven buying - gold and the dollar - while also encouraging investors to seek out out real value. Few stocks offer value today; mining stocks are among the select few. So a shift towards security and value can only help the metals and mining sector.
I'll note here that Bitcoin tracked equities down today, rather than following gold and the dollar up. It only emphasizes that, whatever their proponents might say, cryptocurrencies are a speculation and not a currency!
A correction right now makes sense in all kinds of ways. It had been too long since equities corrected. Markets - especially US stock markets - are prone to weakness early in the year. Greed had gotten extreme.
A correction means a bumpy ride in the short term, but a stronger setup long term. The interesting question now is: will markets correct enough to push gold above resistance at US$1,360 per oz? If so, things will get very interesting - and profitable - in the gold sector, and soon. If not, then real opportunity is just delayed until later in the year.
If this turns into a crash rather than a correction (which I doubt it will), the playbook changes. Gold will gain but stocks of all kinds - including gold miners - will fall, at least during the crash itself. Once the worst is over, I would expect the gold sector to have the kind of sharp and highly profitable recovery that we saw in 2009...but we would have to endure pains before those gains.
In her letter, Resource Maven explains what she is buying and selling, and why. Maven has bought into several of the markets best - performing stocks well ahead of the curve. She regularly identifies exciting new exploration opportunities and manages the inherent risk by selling some into speculative gains. And the mine builder and operator stocks that form the basis of the portfolio give strong, ongoing leverage to the rising prices of gold and silver. She has your precious metal bases covered.
I'm one of your new subscribers (by way of investing.com) and just want to belatedly thank you for the recent sell recommendation that saved me quite a bit of money. (I also follow a few other mining newsletters, and, like so many other financial analysts, they were too hesitant and biased against putting out sell alerts.) And I find your newsletters very nicely done in general.
The change is terrific for two reasons: it's current and concise. I suspect it really isn't that much harder for you to do since you always have opinions on the companies anyway. For me it provides current assessment without having to wait for an occasional update.... Another comment on your service is that you cover way more companies than I want to invest in but that provides me with a selection. I've always considered advisors as desperately needed filteres in the dog eat dog investment world. Keep up the good work