I remain completely baffled when it comes to
understanding the movement of precious metal mining
stocks.
Seems to me that when gold and silver are beaten down (like
yesterday), the miners take an even stronger hit. When
gold and silver move up ($25.00+ today), the miners drift lower yet
again. Huh? If there isn't any manipulation
happening behind the scenes, what is it??
Am I to believe there is absolutely NO correlation between
the movement of the underlying metal and the movement of the mining
stocks, or is it a one-way street (correlation only on the way
down)?
Very frustrating, to say the least. Precious metals mining
stocks are the only equities I keep as core holdings; everything
else is strictly a trade. Wish I had treated the miners like
I treat all the other stocks (buy/sell short-term strictly by the
charts), but I haven't.
From the posts I read, I suspect I have company in that
regard.
Part of the answer may be a popular sector attracting weak
hands. Precious metals and mining stocks being such common
newsletter fodder and fitting so neatly into certain political
ideologies makes a fine recipe for the often violent shaking out of
weak hands. It is not any wonder the sector is subject to so many
conspiracy theories when conspiracy theories are what attracts so
many to the sector in the first place.
but I have to disagree with you regarding popularity of the
sector. It may get its fair share of press
but....
I manage a mid-sized law firm, oversee the firm's profit
sharing plan, know quite a few clever people between
employees, business contacts, colleagues, family and friends...and
can honestly say, that of the 300-400 individuals in my email
address book, maybe 4-5 have precious metals investing
even on their radar screen. That's a small % of
investors...and I'm fairly certain that's representative of the
population at large in this country.
Can't be a crowded trade, in my opinion. So, there must be
a different explanation.
RichieD, miners were spared yesterday IMO. Metals took a
bigger hit -- miners held up well. Could be a bullish sign
going forward (maybe gives that slim chance of an IHS that Matt
alludes to a better chance). Even today, miners re-couped 50%
of yesterday's losses, whereas metal didn't quite make 38% yet.
Again, miners outperform. What would worry me is if the
equity market had a decent correction as well as gold. I
haven't like PM stocks in a while as they have vastly
underperformed the metal.
Posted by parkridge77 on 1st of Mar 2012 at 03:19 pm
Mining stocks- I hear you Richie- traditioanlly miners are for
levrage to metal, but part the theory why they haven't
preformed is that new etf vehicles have taken signficiant market
share. For core exposure I hold GTU for gold & CEF
silver. Still have best of breeds like GG . Capex &
labor costs do count. AEM to woodshed when it had to lower reserves
on a mine that took on water & stopped ops also KGC has
been a disater on fundamentals. As for baffled
NEM was rec'ed by the Barron's Round Table a year
ago & it's bascially the same price today- so you're in
there with the industry best on being baffled.
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I love the simplicity of technical analysis but.........
Posted by RichieD on 1st of Mar 2012 at 03:13 pm
I remain completely baffled when it comes to understanding the movement of precious metal mining stocks.
Seems to me that when gold and silver are beaten down (like yesterday), the miners take an even stronger hit. When gold and silver move up ($25.00+ today), the miners drift lower yet again. Huh? If there isn't any manipulation happening behind the scenes, what is it??
Am I to believe there is absolutely NO correlation between the movement of the underlying metal and the movement of the mining stocks, or is it a one-way street (correlation only on the way down)?
Very frustrating, to say the least. Precious metals mining stocks are the only equities I keep as core holdings; everything else is strictly a trade. Wish I had treated the miners like I treat all the other stocks (buy/sell short-term strictly by the charts), but I haven't.
From the posts I read, I suspect I have company in that regard.
Mining Stocks
Posted by majminor on 1st of Mar 2012 at 04:03 pm
Part of the answer may be a popular sector attracting weak hands. Precious metals and mining stocks being such common newsletter fodder and fitting so neatly into certain political ideologies makes a fine recipe for the often violent shaking out of weak hands. It is not any wonder the sector is subject to so many conspiracy theories when conspiracy theories are what attracts so many to the sector in the first place.
I hear you majminor.........
Posted by RichieD on 1st of Mar 2012 at 04:41 pm
but I have to disagree with you regarding popularity of the sector. It may get its fair share of press but....
I manage a mid-sized law firm, oversee the firm's profit sharing plan, know quite a few clever people between employees, business contacts, colleagues, family and friends...and can honestly say, that of the 300-400 individuals in my email address book, maybe 4-5 have precious metals investing even on their radar screen. That's a small % of investors...and I'm fairly certain that's representative of the population at large in this country.
Can't be a crowded trade, in my opinion. So, there must be a different explanation.
RichieD, miners were spared yesterday
Posted by kalinm on 1st of Mar 2012 at 03:21 pm
RichieD, miners were spared yesterday IMO. Metals took a bigger hit -- miners held up well. Could be a bullish sign going forward (maybe gives that slim chance of an IHS that Matt alludes to a better chance). Even today, miners re-couped 50% of yesterday's losses, whereas metal didn't quite make 38% yet. Again, miners outperform. What would worry me is if the equity market had a decent correction as well as gold. I haven't like PM stocks in a while as they have vastly underperformed the metal.
Mining stocks- I hear you
Posted by parkridge77 on 1st of Mar 2012 at 03:19 pm
Mining stocks- I hear you Richie- traditioanlly miners are for levrage to metal, but part the theory why they haven't preformed is that new etf vehicles have taken signficiant market share. For core exposure I hold GTU for gold & CEF silver. Still have best of breeds like GG . Capex & labor costs do count. AEM to woodshed when it had to lower reserves on a mine that took on water & stopped ops also KGC has been a disater on fundamentals. As for baffled NEM was rec'ed by the Barron's Round Table a year ago & it's bascially the same price today- so you're in there with the industry best on being baffled.