This ratio has actually crashed as much since the summer Euro hysterics blew out as it did when everything blew out in 2008 (by about .20 in each instance). And it may not be done declining now that the first support area has given way.I was truly incorrect in the 'gold stocks are a buy vs. the broad market' notion as I got bullish on a risk vs. reward basis too soon after being cautious on the PM's out of the Euro crisis. And I am not even going to blame the treasury yield manipulators, either. Just wrong is all.
Yet we (in NFTRH) have been guarded the sector since nominal Huey (by daily chart) failed to make a higher high in February. It is with mixed feelings I watch the sector get pummeled, with most of the negative feelings being related to what I consider morally bankrupt policy making. On the positive side, there will come a day, I'll be ready and... I'll get you my pretty. Oh yes I will.
http://www.biiwii.blogspot.com
http://www.biiwii.com
After the $100 down-day I took my loss and have shifted to cash and selling gold volatility with a slight bias to the downside, I'll do that until Gold reclaims its 8-week moving average.
ReplyDeleteWhich gold stocks are a buy?
ReplyDeleteI mean, which $HUI stock would you ever want to own?
Quit looking at $HUI.
Exactly. But GDXJ is not much better since it's got so many silver stocks in it. Yet the performance of PVG, RIO.TO, AR.TO and others I've owned are so much better than the average HUI component.
DeleteSo yes, I never meant buy HUI, but rather 'QUALITY gold stocks are a buy vs. the SPX'. But even that was too early a call.
Maybe I should focus more on gold's real price and less on this crappy index.
Then again, GDXJ (hopefully) is made of growth companies, which is closer to what you like to buy. The majors can't grow anymore because their capex costs are insane, so $HUI goes downhill cos of them.
ReplyDeleteThen again, GDXJ also has some crappy stocks in it. But maybe the crappy stocks are still crappy stocks with a perceived upside?
I wonder if there's a "pure gold" juniors ETF.
I understand and commend you on your flexibility to recognize a particular scenario is no longer in play and switching sides is in order. I will add however, that being negative on the $HUI index is very much in style now and it is evident that we are at that stage where "investors" are "swearing-off" the seniors "for good". One look at the monthly chart of the $HUI (or any other senior gold stock index)with the CCI(20) shows very clearly that we've been here(there) before. 4/2005, and 9/2008 (ouch for a month more!). Of course whether the current picture is similar and plays itself out accordingly is obviously dependent on the whether the "secular bull market theme" remains intact. If it does, then the weakness should be embraced; if the "game is over" then much, much lower prices lie ahead; I vote for the former.
ReplyDeleteNot switching side PK. Well, adding to the other side w/ ERF, EMF and DBA, but not switching. Not by a long shot. This is going to be a hell of a trade when it reverses (not nec. HUI stuff, but quality PM's in general).
DeleteSorry, didn't mean to come across that you are switching sides. I should have stated "being able to recognize risk potential situations and acting accordingly". Anyways Gary, I do concur that "one day" and although that "day" may not be far off in terms of a bottom, the real fireworks where you can just throw a dart and be right are probably a couple of years away so in the interim, quality will pay off (it usually does in any environment anyways)
Delete