As we have noted over the many years of the gold sector’s bear market, the gold miners will not rally for real until the real sector and macro fundamentals come into place. Those fundamentals do not include commonly promoted inflation, China/India “love” trades, a US dollar collapse or especially, war, pestilence or any other human misery than economic. The more astute gold bugs do not fall for that.
The gold miners are counter-cyclical as they leverage gold’s performance (whether positive or negative) relative to cyclical assets and markets. Hence the handy picture showing the key fundamental items with the 4 largest planets orbiting the golden sun being the most important.
So the 3 Amigos (of the macro) were saddled up last year in order to guide us to the point of macro change. Linked here is the most recent update from October 19. In this post let’s look at just one macro fundamental indicator among several important macro and sector fundamentals; the ratio of gold to developed stock markets.
As a side note, the macro fundamentals indicate whether the larger economic cycle and investor sentiment backdrops are right for the gold sector and the sector fundamentals that we track indicate whether gold mining companies are likely to improve, operationally. The gold stock sector is a real value now, assuming the turns in stock markets are for real, unlike the February spike down. Continue reading "Gold Stocks Will Benefit From Cyclical Change"
