"As a technician, I feel that there are few analysts that offer value for me, but you do. Your work on Gold ratios has helped my analysis greatly." --Jordan Roy-Byrne, CMT (The Daily Gold) 4.9.10

Wednesday, January 18, 2012

Gold Stocks vs. S&P 500

A commenter on the previous post noted how bad the gold stocks have been and there is no denying the frustration and the poor performance of late, but the major gold stocks are in an uptrend vs. the broad stock market, when adjusting the time frame out to a bigger picture.  I realize that most people focus on the noise of any short or intermediate term phase but it is important to keep an ongoing view on the big pic macro backdrop at all times.

This is not boosting, it just is what it is.  HUI is at a point that has been a 'buy' vs. the SPX.  Could it fail this time?  Well, yeh.  But the fact is that HUI is at a major support point in relation to SPX.  No ifs ands or buts.  Monthly chart:











As for the short term pain, I do not want to come off like a genius stock picker because I have a few holdings that are beaten down and frankly, I cannot figure out why (given their management and assets).  But there are quality stocks that go their own way based on their merits in a sector that also includes a lot of garbage.  Daily charts of my 3 best performers:





























A combination of assets and stellar management that does what it says it is going to do near 100% of the time appears to be the common theme.  Some gold mining companies are run by forthright, hard working and in some case very bright people.  Many gold mining companies however, are run by dullards or worse.

Just like in the general stock world, only I think there is a proud tradition of bad management and extreme hype in this sector that begs would-be investors to be careful.  Everybody's out there pitching mines after all; third party promoters, websites, newsletters, supposed gold mining analysts and often the companies themselves (in conjunction with options issuance, opportunistic financing through share sales and other shenanigans).

If I did not have Otto, Metal AuGmentor, Mickey Fulp and my man on the ground (and at several mines), NFTRH subscriber Frederick on the job, I would feel insecure trying to manage this errr 'mine' field.  I guess what I am saying is that gold and the gold mining sector is heavily promoted, and you are the promotional target.  This is not a comment on the merits of gold and the best miners, it is just a fact of life in the sector, as it is in the stock and financial asset world in general.  Everybody's pitching and you need a b/s detector.


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1 comment:

  1. Those are incredible looking charts, especially in a not so friendly environment. Congrats!

    ReplyDelete