alice

NFTRH; A signal in Precious Metals and other thoughts

While several individual miners (e.g. WDO.TO, KL from my holdings) are doing better than the sector itself we used the HUI/Gold ratio as a guide when it was bullish and we need to use it now, as it turns bearish. Of course we’ve been noting a turn to bearish for the sector since the February high, so this is a bit of a ‘Captain Obvious’ update. But nonetheless…

HUI/GLD is ticking a lower low (to January) today.

While nominal HUI does the same.

My concern for the sector is the potential for a Trade War relief bid to come to risk ‘on’ stock markets. If that bid never comes I will not be concerned about the decline in gold stocks. Indeed, if stock markets go bearish the world over, that would be the time to buy whatever lows this correction in the gold sector has out ahead of it.

For now I continue to hold my increased short against gold while holding favored miners. I may ditch a couple of them but again, on the whole they are not (yet) declining with the broad HUI. As an example, I look at my portfolio today and see WDO.TO (+4%), KL (-1.5% after a decent bounce), OSK.TO (+2%), ITR.V (+3%) and PG.TO (+1.7%) and will probably be content with the sector acting as ballast against broad stock market positions in the short-term.

But the fundamental story remains the same. The macro fundamentals must turn for a constructive view and that means that the global relief rallies – led by our very own USS Good Ship Lollypop – need to end. Unfortunately there is a lot of geopolitical noise in the mix and so I am trying to stay balanced (incl. heavy cash) until we have resolution of some kind.