After Thursday’s FOMC meeting, and their announcement to hold back on hiking interest rates, we identified an extremely interesting phenomenon: gold miners are outperforming equity indices.
Is this the start of a trend change?
Our answer to that question is YES, given that you select the right miners that are strongly outperforming. Why? Because in case gold would make a lower low in the short run, those outperformers will bounce sharply, similar to what they did lately.
Our point is proven by the next chart which shows the general gold mining index GDX (red line) and two of our favorite gold miners since the low that was set at the end of July of this year.
Note that these 2 gold miners are analyzed in our latest Gold & Silver Report, and that they both have an excellent score of 8 (on a scale to 10) in our report.
Take a moment to compare the performance of those two gold miners against the gold mining index. While the GDX has moved up close to 6%, our favorite gold stocks bounced respectively 17% and 26% !
Gold miners have been hit very hard in this bear market, but, as we have pointed out repeatedly, the upside potential of quality gold stocks is extraordinarily at this point.
This is a dream for real secular investors.
Secular opportunities of this type are rare, and, as we said earlier this week, we are encouraged by the ultimate contrarian BUY signal, i.e. almost nobody is looking into this sector … except the true masters of the financial world.
Indeed, multi billionaires like Stan Druckenmiller, George Soros, Marc Faber, are piling up quality gold and silver miners in 2015, and they are doing so ‘under the radar’.
If top investors are looking into the gold mining space, there has to be a reason.
If anything, those investors are carefully choosing a mix of miners for their portfolio, based on these 4 categories:
- royalty companies
- producers
- mid-tiers
- juniors
Every gold investor should have such a mix from a risk management point of view.
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