Goldtent TA Paradise

Gold miners breakout now… or hibernate some more?

1. Karl says:

   February 9, 2020 - 5:02 pm at 5:02 pm

   A third logical possibility is that they go down, possibly substantially, for a while.

   • Karl says:

     February 9, 2020 - 5:07 pm at 5:07 pm

     I believe that charts point upwards for the most part. At least the long and intermediate term trends do. (I tend mainly to look mainly at trends.)

     Although I keep reminding myself that I can’t figure out the fundamentals because things are too complicated, I do tend to think there are any number of reasons why the gold miners should go up, certainly in the long run.

     Nevertheless there can be a bit of magical thinking even in the best of TA (and I do not claim to practice anything like that). It does not take into account Giant Meteor, for example, which might wipe out all exchanges and all of humanity. Or perhaps that rumors (true or not) of some virus might disrupt markets for months and scare everyone to pieces.

     Rumors may even scare ‘bugs out of their favorite safe haven. I recently wrote that gold miners should be immune from deflation panic since the miners should be able to mine cheaply with cheap trucks, cheap energy, and so forth. However if investors and speculators start panicking that the miners will have sick employees, or that their copper byproducts will be too cheap, and that they will then have poor earnings for a couple of quarters — then maybe their stocks will be sold off (too harshly). There are probably all sorts of weird financial interactions anyone with a good imagination could conjure up as well.

     Therefore the 3d possibility of having to sell now and buy back really cheaply later, maybe, or else weather some significant unpleasantness — or taking some intermediate position (selling some stuff, hedging if you can figure out how to do it) — might be there.

     I wish I knew.

     • Karl says:

       February 9, 2020 - 5:47 pm at 5:47 pm

       Sooner or later someone is likely to turn on its head the sales pitch about how gold can only go up because the Chinese are the future of the world and they are buying like crazy. There could be frenzied headlines on how there will be no market for gold, how the Chinese gov’t will have to dishoard gold to pay for this and that, and all sorts of crazy over-reaction.

       Or maybe I’m thinking of the wrong thing. Some bozos have pushed the wrong buttons and the fail-safe software fails for some missile and a horrific little or not so little war starts and gold stocks like other stocks plummet at least for a while, or ditto with some other kind of noninfectious disaster somewhere. Or maybe it is Giant Meteor, maybe filled with gold.

       In any case, though I think the good gold miners are a great bet long and even intermediate term, I would not be surprised about anything right now.

2. Fullgoldcrown says:

   February 9, 2020 - 7:18 pm at 7:18 pm

   4th Gold Bull ERA ?

   You are coining a phrase Sir Patrick

   Sounds Grande

   I have been trying to count 3 previous ERAs ….

   The 2000s Decade

   The 1970’s

   and what ?

   I assume you are calling 1933 when They confiscated Gold in USA and then raised the price from 20 to 35 Dollars >?

   But that was hardly an ERA….it was a moment !

   Talk about Manipulation !

   🙂

   • Bikoo99 says:

     February 9, 2020 - 8:59 pm at 8:59 pm

     LOL!! You r some thing Sir Fully.

3. Fullgoldcrown says:

   February 9, 2020 - 7:33 pm at 7:33 pm

   Patrick

   Good point. in the beginning of the 2000 Bull Gold broke out first . Thanks I didnt realize that

   I note from you chart however

   Once the XAU finally broke out it underperformed the Gold Bull

   Gold Stocks miserably failed investors who were trained to believe that Gold Stocks

   are a leveraged play on Gold as when gold rises The margins of their profits increase

   exponentially. That is the theory that got us ALL into Gold Stocks and not focused on Gold the metal.

   With Gold at $400…..The XAU in 1996 based on you chart was 160

   in the 2001 to 2008 Bull run Gold peaked out at $1000 with the XAU peaking at 200

   So between 1996 and 2008 Gold rose 250% and XAU rose a mere 25% !

   How do you like that kick in the gnads ?

   There sure was leverage with gold stocks …1 to 10 reversed leverage.

   The joke has always been on Goldbugs ( like me) who have focused on Gold Stocks .

   We were way better off to just buy the damn boring metal and sit on it !

   Same thing happened with the final blow off in 2011

   $1900 Gold ….230 XAU

   Do the Math…Golds peak in 2011 was 90% above its peak in 2008

   XAU peak was 15% abouve its 2008 Peak

   So it even got exponentially worse. !!

   Gold Stocks have been a big sad joke foistred on those of us who fell in love with the notion of them being 3 times levered to gold

   End of sour grapes rant !

   • Steins1 says:

     February 9, 2020 - 7:43 pm at 7:43 pm

     Fully, the miners have done extraordinary at least a couple times I’ve owned them.
     The last time in 16 and the last bull before that……I just never sold!!!! Grimace….
     Maybe we’ll follow the charts this time!

     • Fullgoldcrown says:

       February 9, 2020 - 7:54 pm at 7:54 pm

       We never sell …that IS the problem

       The run like hell every so often and we wait for “The Moon”

       🙂

       • Steins1 says:

         February 9, 2020 - 8:11 pm at 8:11 pm

         Well, come on, we will sell right before a huge run up!::::::::::: shaking head ::::::::::::

   • Patrick says:

     February 9, 2020 - 8:01 pm at 8:01 pm

     Yeah… boring metals.. no company fundamentals to analyse… no earnings surprises… etc.. I find it already stressfull and time consuming to survey the precious metals complexe… adding individual stocks to that would be grulling… and I’d have to diversify accross many miners.. to make sure I can off set the rogue CEO that leaves with the secretary! I guess that’s my trading profile. Keep it simple. I added a post regarding my bull run segragations… ahhh… wait … gold bull era that is! Thanks for the challenging questions Fully… it’s all in the details!

   • Bikoo99 says:

     February 9, 2020 - 9:02 pm at 9:02 pm

     Correct characterization of Gold PM sector. Well said recounting what all investor went thru in last 20 years.

     There have been several posts here showing that miners to gold has been in bear trend since 1966. (BGMI/GOLD). thats why there is no lev to gold for miners.

4. Karl says:

   February 10, 2020 - 5:52 am at 5:52 am

   There is actually a positive side to owning gold stocks–but not blindly. Despite my negative comments above, this inclination is the one I tend to favor. 2 things:

   1. If you don’t throw your money into bad stocks you do o.k. even in bad times. If you are astute, with lucky or intelligent stock picking you can beat the indexes, which can include some junky stuff or can get pushed around too much by popularity and sentiment depending on the epoch. What if you had just owned the big royalty companies, for example? What if you had owned solid explorer-developers that weren’t too highly promoted (not blatant scams, curving upwards charts, etc) and then sold them whenever there was massive “Breakout!!!!”? Or other strategies that I think would have been plain vanilla rational and not just in retrospect.

   2. Combination of money management and patience:
   Even if you just did some index or mutual fund and didn’t go overboard you might have done ok with a bit of sense.

   • Karl says:

     February 10, 2020 - 6:09 am at 6:09 am

     On #1, I think there are any number of strategies that work or could have worked. I use a mix of them having learned from many errors. I think taking partial profits into big rises is a great component for many strategies and selling a bit into weakness also.

     Most of the companies, from tiny to large, are in fact poorly run one way or another and most of us get sucked in, but comparing how which of your holdings are doing and doing judicious selling and buying can be one good way of cushioning effects of market swings on mismanagement.