How about a little R-E-S-P-E-C-T for G-O-L-D ?
Listening to all of the Goldbug pessimism of late, you'd think Gold was at $323 instead of $423 ?
Gold at $423 is only 7% off of its 17 Year Highs here !?!
...that's right - 17 YEAR HIGH.
On a percentage of it's Cycle High basis - $423 Gold is the same as $56ish Crude Oil !
Both commodity's are basically at the same price levels to their highs... but Investor Sentiment could NOT be more disparate !
The Oil Permabulls are confidently digging in at the plate & pointing their bats to the upper deck in the finest Ruthian fashion and calling for an imminent 600 Foot Home Run & alltime new highs ! ... while the Goldbugs are walking up the runway with their heads down & their chins in their chest after taking themselves out of the game for a pinch-hitter !?!?!
C'Mon Goldbugs.... BUCK UP !
I simply do not understand the pessimism on goldstocks here ?
Here's a little Reality Check vis a vie comparing Gold to Oil:
Ask the average Investor on Main Street USA the following question:
- What Sector over the last 5 years has not just outperformed the Dow, the S&P and the Nasdaq; but has also over "doubled" the gains of even the Oil & Natural Gas Stocks that are getting all of the recent headlines, over that same 5 year timeframe ?
...and you'll get a blank stare when you show them this chart:
finance.yahoo.com
...and when they learn it's the "Goldstocks" - you'll get an answer something to the effect...that quote:unquote - " they thought gold & goldstocks were - way down" etc...
Gold can't buy any Recognition, let alone any Respect of late...
Gold isn't even getting any R-E-S-P-E-C-T from it's usually most ardent supporters - the Professional Goldstock Newsletter Pundits ?!?!?
As reported by Marketwatch and also echo'd of late by John Hathaway of the Tocqueville Funds - "The Hulbert Gold Newsletter Sentiment Index just recently matched record low readings. The May 23rd Market Vane sentiment gold barometer was 61% bulls, the lowest since 57% on May 13, 2004 when gold was $379. The bullish consensus was in the 40’s in April ‘03 when gold was $320. The peak recent reading was 83% in October of 2004 when the gold price was slightly below $430."
So even after this strong move up off of the bottom and with still very attractive valuations; why - still the negative sentiment, disbelief and lack of R-E-S-P-E-C-T even amongst the Goldbug Pundits ?
In my opinion... it's because they have taken their eye off of the proverbial ball - the "ball" being the underlying FUNDAMENTALS for Gold.
Goldbugs were shaken out much too easily on the recent US Dollar Rally and the belief that the Fed raising Rates would also reinforce a Stronger Dollar and that Gold and Goldshares would soon collapse.
While Gold did retrace off of it's 17 Year Highs of this past November, back to $410 in February and $413 in late June - it rallied strongly back thru $440 each time and more importantly; the Chart for Gold is still strongly within a powerfull Up-Trend:
stockcharts.com[w,a]daclyyay[df][pb400!b200!f][vc60][iut]&pref=G
Regarding goldstocks; HL, NEM & AEM are the only HUI components more than 2%ish off of their 200 dma.
NEM has had it's obvious problems, HL is primarily a Silver Play & AEM has a base metal component (not that FCX, or CDE are Gold pureplays either fwiw..the HUI is clearly NOT a pure "goldbug" index).
On a 50 dma basis... only HL is below it's "50" and just barely so @ - 1.45%.
Here's the HUI Components:
Company.....Weighting to HUI.....200 dma.......50 dma
GFI.........15.58%...................- 0.01%.......+ 5.91%
NEM.........14.61%...................- 6.89%.......+ 0.54%
FCX........ 9.85%....................+ 2.30%.......+ 5.87%
HMY........ 5.25%....................+ 8.02%.......+10.70%
EGO........ 5.23%................... + 3.80%.......+15.45%
GLG........ 5.17%....................+ 6.03%.......+ 8.47%
KGC........ 5.15%....................+ 0.41%.......+10.13%
GG......... 5.12%....................+ 11.80%......+ 9.08%
MDG........ 5.00%....................+ 1.45%.......+ 3.78%
GSS........ 4.89%....................- 2.13%.......+ 2.81%
AEM........ 4.88%....................- 5.48%.......+ 3.68%
IAG........ 4.86%....................+ 6.55%.......+ 4.90%
HL......... 4.84%....................- 14.87%......- 1.45%
CDE.........4.79%....................- 2.54%.......+ 4.95%
GOLD....... 4.79%....................- 2.54%.......+ 3.51%
The HUI just rallied 40 points right up off of it's bottom on this recent capitulation/washout in goldstocks... and that's exactly what it was...a complete & utter capitulation and washout.
But, for those Traders that realize the best of the best trades the market EVER offers are - "discrepancies between price & risk"... this was a "Back Up The Truck- 'monback Trade" that should have been made without ANY hesitation:
stockcharts.com[w,a]daclyyay[de][pb50!b200!f][vc60][iut]&pref=G
The HUI:Gold Ratio reached an extremely cheap divergence level during the April/May Capitulation/Washout... literally the best buying opportunity in 2 years + for Goldstocks...and at a level historically supported as a near infallible trade as the sector ever offers...
Again, Oil get's all the headlines, all of the R-E-S-P-E-C-T ...as well as all of the recognition - but, the HUI has outperformed the OSX, the XNG and the XOI since the May lows - to date.
The HUI has been perhaps the top performing sector in the entire market up off of the HUI 165 bottom here - running up 40 points & 20%+ over the last 6-7 weeks - but yet goldstocks can't buy a headline, let alone any respect.... not even from their own - re:
...the recent Sentiment "peak" as reported by the Hulbert Digest was at $430 Gold in October 2004 and we were at $429 & change this morning...and that's off a pullback from $440 !
Hello .... Earth to Goldbugs ?
So why the disparity in Sentiment between $430 Gold then and $430 Gold now ?
In my opinion, it's because too many Goldbugs have suffered from "Technical-Tunnell Vision" here of late...and they took their eye off of the fundamental ball.
Many Goldbugs lost track of and ignored the transition phase that Goldstocks have entered into vis a vie the true underlying fundamental drivers for Gold here.
Gold and Goldstocks are no longer - "just a negative correlated trade to the US Dollar."
Many Goldbugs bailed out on Gold and the goldstocks on the US Dollar Rally of Late and the belief that Gold & Goldstocks would not do well during a Fed Rate Hike Environment and a Rally in the US Dollar.
WRONG.
Gold not only rallied headlong into a stronger US Dollar but, has also broken to new highs in the Euro, the Japanese Yen and most importantly in the "safest" of Safe Haven Currency's - the Swiss Franc:
Gold in Swiss Francs:
stockcharts.com[w,a]daclyyay[df][pb50!b200!f][vc60][iut]&pref=G
Gold in Japanese Yen:
stockcharts.com[w,a]daclyyay[df][pb50!b200!f][vc60][iut]&pref=G
Gold in Euro Dollars:
stockcharts.com[w,a]daclyyay[df][pb50!b200!f][vc60][iut]&pref=G
Even with the rather "suspicious" whacking of Gold last Friday... $423 Gold is to it's cycle Highs - that $56 Crude Oil is to it's cycle high !
In my opinion - that is the proper perspective that Gold should be viewed.
The Oil Bulls are pointing their bat's towards the Upper Deck and Calling for New Alltime Highs... while the Goldbugs at the same exact levels...have laid down their bats and taken themselves out of the game and walked off the field... ?
It's time for Goldbugs to reach down deep and to Buck-Up !!!!!!!!!
Here's some Goldatorade:
Globally, we've had massive Fiat & Commodity Inflation, we have staggering US Deficits that only look to grow ever larger in the coming years, the TIC is falling below US Trade Deficit numbers, Gold is emerging to new highs in Multiple Currencies - not the least being the proverbial Safest of All Safe Havens - The Swiss Franc... we have falling Global Mining Production/Output, a Market Environment of low combined returns from Stocks & Bonds, Substantial Market & Geopolitical Risk and vis a vie the historic Oil:Gold ratio - we have ramping Oil Prices with Gold being now historically cheap to Oil, we've seen an explosion in Debt, Credit and DERIVATIVE Levels, we're seeing the emergence of the Low/Middle Socioeconomic Classes within India & China - both having a Culturally supported long history of physical Gold & Silver accumulation, we have Central Banks ahead of Schedule on their Washington Agreement Sales, we have the US ramping pressure for China to Re-Peg the Yuan which will lower the USD...and of course - Gold remains the ultimate "clean credit" carrying no one elses obligation, or promise to pay ~ along with a History supporting its durability as MONEY that is exponential of that of Fiat Currency.
It's time to re-focus on the fundamental "ball"...and to get back in the Game and to get "ON", to get very "LONG" and to stay extremely "STRONG" - The Yellow Train…. because she's getting ready to pull out of the Station....soon, very soon....we've basically already passed the 50 & 200 dma "mile markers".... don't get left behind....the HUI in these environments oft' turns into a coiled spring.
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