Goldtent TA Paradise

Will Gold Stocks Be a Life Bouy

1. kemmrich says:

   October 2, 2019 - 3:34 pm at 3:34 pm

   In 2008, HUI crashed more (~70%) than the Dow30 (~50%) or Nasdaq (~54%) — but it started it’s recovery before (nov ’08) the general stock market (apr 2009).

   If the market crashes it most likely with take the mining stocks with it (for awhile). Maybe this time is different?

2. Todamoon says:

   October 2, 2019 - 5:02 pm at 5:02 pm

   The only thing that may be the saving grace was that in 2008 everyone including their mum and dog were trading the mining stocks – now they are the most hated group and have been pulverized! If the general market takes a beating they will go down but it will be fast with a very sudden reversal – my two cents

3. Karl says:

   October 2, 2019 - 6:39 pm at 6:39 pm

   I agree with the above, in general.

   [First, however, we are assuming “gold” will stay “flying”. There is “gold” and there is “gold.” There is Comex gold that perhaps has trouble trading in severely stressful times. There are coins that may trade at prices far different from prices quoted on the exchanges, and may trade differently in private than in public, etc etc. But let’s assume all “gold” is approximately the same and that it is a safe haven, more or less. We will assume that it doesn’t plummet.]

   To differing degrees in different epochs gold stocks tend often to correlate positively with both gold and the general stock market. If gold is more or less constant, gold stocks will tend to go down all other things being equal.

   Another way of looking at things is thinking of panic, margin calls, and the need to pay for taxes, mortgages, rents, groceries, tuitions, etc. In many ways the logical thing to do is to sell first the stocks with the weakest financials. That will mean the most speculative companies that have no earnings or are way overpriced compared to scant earnings. But these are ones people love the most. People are reluctant to sell them way below their highs, whether they are PM “juniors” or Silicon Valley startups. So pretty soon all these go way down, PM or not PM and may not have buyers when things get really bad. If it’s a sector that has already been having problems like PM stocks, and it’s tax selling season, then the little speculative stocks will have an extra reason to get hit. So the absolute best speculative PM stocks (and non PM stocks) will get knocked down to ridiculous levels, along with all the speculative sewage from all sectors.

   If people were really smart as they anticipated having to raise cash they would have sold all the speculative stuff immediately unless they can be happy holding for 2-5 years Spock-style while some companies go bankrupt and others revive. If they sell their most speculative stuff they can have held on to their (insert whatever you think is solid for you–RGLD? KL? FNV? Newcrest? etc) which will almost always have bidders. Instead of selling the beloved speculatives first what people do is when they start seeing trouble they sell their RGLD etc so that they can hold onto their beloved speculative stuff, which soon however becomes almost unsellable.

   At the bottom, anyone who has held on should do extremely well with any of the decent PM companies big or small that don’t go bankrupt. Anyone with cash and any stockpicking abilities will have a field day. Many people will long for the perceived safety of gold and go for the RGLDs and other strong companies, now way too cheap because of irrational selling yet still profitable, and tightly tied to gold which now seems like more like a haven than before. Speculators with cash will appreciate the speculative possibilities of the beaten down tiny ones with potential, and these may have a bit of a safe-haven sheen that perhaps they won’t deserve until years in the future at best.

   So my longwinded way of agreeing. The PM stocks, big and little get hit if the stock market goes down. Then the ones that don’t go bankrupt go up and possibly quite fast. But I’m only extrapolating from only a little bit of experience and from hearing a bit of others’ experience. I really don’t know and am probably producing fiction.

   • Fullgoldcrown says:

     October 2, 2019 - 7:43 pm at 7:43 pm

     You should write a novel Karl