With markets at record highs and the dollar surging, there are few reasons to buy gold stocks here, following triple digits runs higher. Over the past week, the media losses for the miners is about 6%, hardly onerous, not in the least scary.
Today the drubbing is intensifying, only because there’s a general weakness in commodity related stocks. Also, recent market trends have decoupled commodities from the overall market, leaving basket buyers of commodities left holding their dicks in their hands.
Personally, I sold my gold positions after the last jobs report, afraid that a better than expected economic outlook would lead our Fed heads to jawbone about higher rates. Again, monetary easing is the main driver for gold. Should the Fed actually begin raising rates, I suspect the dollar will rise and gold will drop. Very simple.
For those looking to get some gold exposure, I can only advise you to hang tight. Lower prices are likely in the foreseeable future.
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Long oil stocks. Short gold stocks.
DISCLAIMER: I have been wrong on gold since I sold my March calls back in early January.
Nobody can be wrong 100% of the time though right? Heh heh… ehh.
I don’t understand the easing is good for gold argument. Fundamentally it makes sense, but during the heaviest period of QE under the great surgeon Bernanke, gold plummeted for nearly 5 years.