Small inside day for the HUI - felt like a major victory.
We did see a turn down in the red DMI line...but the close was the second below the 200 day moving average.
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the good news seems to be that the expectation of either no or only a small FED Funds cut is being factored into prices. Additionally, the feeling seems to be this will be the last cut, assuming there is one, for this cycle. Something other than falling interest rates will have to come up to move speculators back into Gold with conviction. Sooner or later it will emerge...
USD rally - back up to 74.28 - 75.50?? Boy, that'll shake the faith....
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Thinking that fuel and food pricing can be controlled by interest rates and jawboning seems folly..
The greater issue for miner owners is whether they are the appropriate vehicle for inflation hedging. Going way back to the 70s they were about the only game in down outside futures markets which ladies and gentlemen didn't discuss, much less trade. In the 90s and even early in the 21st century bull market there were few direct inflation hedge plays for the average and even institutional investor through equities ...Now there are all matter of ETFs, close end funds (and stocks) that offer a targeted play on the inflation issue, whether it be fertilizer, oil, grain prices, natural gas or livestock prices...
Miners have high valuations relative to earnings, which it will be argued is not how they are valued; but their cost structures are pressured by increases in base commodities and fuel which in many cases are rising faster than their end product. Additionally, the financing problems brought about by the credit crunch seem to land right at the miners door steps.
It is easy to get discouraged when prices haven't gone ones way for a while, and to begin questioning the assumptions that got one in a group to begin with. Maybe things will play out as they have in the past, but I find it best to be squarely focused on the present and to concentrate what is working, presently.
That said I'm still dragging around a 18% portfolio weighting in PM related metal and miners - holding 38% cash....looking for a brighter day...
Worth a look might be the S&P Metal and miners ETF - XME..Currently out performing the HUI et al....but it doesn't always...
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