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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 476.10+2.5%Jan 27 4:00 PM EST

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To: TobagoJack who wrote (75320)6/19/2011 12:36:04 PM
From: carranza2  Read Replies (3) of 219831
 
A very good explanation of the god/gold miners divergence by Jesse. Anyone holding miners has to be very, very careful. That includes me:

jessescrossroadscafe.blogspot.com

he Almost Shocking Year-To-Date Divergence Between Gold and the Gold Miners

These are the established companies for the most part.

One can speculate endlessly for the reasons, but it looks to me that there is a paired trade going on, of long bullion and short miners. That is similar to one of my favorite paired trades this year, long bullion and short a broad stock index or the financial sector.

If this is true, if gold breaks out and the stock market recovers somewhat, the miners will play catch up.

But if the stock market falls apart, the miners are much more vulnerable to a selloff than bullion. That is the reason for the paired trade I believe.
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