I've been structurally long (not trading in and out) some gold stocks such as NEM,AU, HGMCY, PAAS etc.a percentage of my Asset Allocation plan for the past few years.
I'm thinking we should focus on the shorter term charts for our trading orientation since folks like MPH are taking a closer look at them.
We may want to revisit the Gold stock market capitalization as a percentage of NASD and NYSE market capitalization. We've discussed that a few different times over the past year or two.
JP
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The lack of public interest is probably best illustrated by the mutual-fund assets that are allocated toward precious metals — or more precisely, the lack thereof. Analysts at Morningstar track 551 funds categorized as ``large-cap blend,'' 462 called ``large-cap growth'' and 352 considered ``large-cap value.'' Only 21 funds, roughly less than half of 1% of their entire universe, are mandated to invest in gold or precious metals. The dollar amounts are even more telling: Large-cap growth funds have assets of some $609 billion. Metals? Less than $2 billion. To me, this smells like opportunity. As we've often discussed, it never pays to run with the herd.
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Message 16393461
It's vastly underowned, and the market capitalization of all of the gold mining stocks is only around 30 billion or so.
In my long term Macro Model of the World economy, after the era of financial assets (stocks and bonds) outperform for a number of years, they then go into longer term bear markets, we have a period of economic
weakness and generally declining prices of just about all assets, stocks, real estate, hard assets, commodities
bonds, etc. some currencies benefit some are hurt). This can last for a few years and in our current cycle could
continue into 2003 or so.
Then as the Central banks reinflate the economy and stem the deflationary trends (since few people have any interest in deflation, there is a cry for higher prices.
As steps are taken to create more liquidity, and expand the monetary aggregates, this means that there is more
currency out there, so it will flow to some asset classes, and investors who have been badly burned by tech stocks
and stocks in general will go to the latest "smart investment". This smart investment will be what has
been doing well the past few years. It always works that way. Why did people buy tech stocks and internet
stocks in 1999 and the start of 2000? because they were going up, and there were reasons for them to go up
more.
GOLD stocks have ALREADY outperformed the SPX for the past 2 Years, when Gold stocks have outperformed
for the past 4 or 5 years, even Rukuyser of Wall Street Week will have a Gold Analyst on his show. He's
made so much fun of Gold the past 2 years, and made lots of fun of everyone who was not long stocks.
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