I’m sorry to disappoint the gold representatives out there, like Jakegint and his ilk, but gold miners are in a terrible bear market, for more than two years. Let’s face some realities, shall we?
Gold, as a metal, has done well over the past two years. However, we’ve seen a horrific divergence between the metal and the miners, haven’t we? We’ve seen this divergence because the facade has been lifted off the farcical faces of the executives at these companies, leaving the companies exposed for what they truly are: frauds.
When gold was on its initial way up, the miners shot higher based upon expectations that the miners would be minting coin. Truth is, the miners are burdened with high costs and operated by inefficient, lazy criminals– posing as corporate executives. They never quite made all of the money they were supposed to make, did they? I do not intend to back up any of my statements with proof. However, I will point you into the direction of a few statistics, alongside a graph.
Here is a chart overlay of the GDX vs the commodity itself, represented by GLD.
And here are the two year returns of the gold miners. Keep in mind, the underlying metal rose by 25% over the past two years.
If gold is money, the gold miners are Myanmnar Kyat.
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Long live the gold streamers RGLD and SAND!
That is true. Out of a hundred, maybe 5 are real companies.
Nice chart.
or buys some DUST
About time for that situation (gold miners/gold) to flip over. Buy AAPL here.
mean reversion ?!?
While there might be a mean reversion trade to be had, especially in February, I wanted to make it clear that the miners aren’t tethered to the ascension of gold.
Hugh Hendry is long gold, short miners. Not a bad trade, in my opinion.
thats been the trade for a while and a kille rone at that. Thats why IMHO we may get a quick run in the miners as everyone has been talking the long gold short miners trade. still in EXK and NEM looking for an exit. At least NEM pays a divvy for the wait.
Thinking about shorting MU on weakness to take the edge off AAPL hangover…
Just did
Agreed, miners suck petrified elk dick.
JAKEGINT IS DEAD.
Jake Gint just Peter Schiff’ed his pants
I don’t think so.
I believe I saw him in the stands on ESPN at a Louisville basketball game.
PS I believe he was buying buckets of SLW when it was in the “3s” or so and he has made out as a bandit on RGLD.
Ole’ Joe Granville (father of the on balance volume indicator) in the ’70s started following gold stocks relative to the actual price of gold and had always written that the gold stocks lead the actual price of the metal by 6 months to a year.
Anyway, this has been distorted by the etfs like GLD which has captured the investors “metals” dollars.
The South African mines have been troubled by labor and old mines requiring expensive drilling (in the old days stocks like VAALY,KLOFY, OFSLY, etc. were killers).
As I have written before one must get inflation out of the vocabulary when talking about gold. It’s all about negative real rates of interest that drives gold (including late ’70s when rates climbed slower than inflation).
That is all- out for a bike ride.
As Mr. Hendry stated, the risk premium of gold mines is ‘insane’.