Back to the Future for the Gold Stock Herd

Is it 2003-2008 for gold stocks?

So this correction in gold stocks brought about frustration but did not (to my eye, anyway) come near the point where the gold bug generals would suffer outright insurrection at the hands of the gold bug followers, err, retail investors. Assuming of course, that said correction is indeed ending.

A Tweet I came across was asking who the best gold mining newsletters were. Among the answers was a gold and technology letter that had a bullish gold and bearish Tech view in mid-2016 even as we noted that was the exact opposite stance to have. Another was a ‘resource maven’, who I know not much of other than she’s a member of the Canada-based resources newsletter establishment/herd.

Side note: To my eye this guy, also among the answers, keeps it real with respect to trying to get it right instead of trying to be popular. This controversial but hard working guy too. There are plenty of other good ones. But when things go bullish the big newsletter empires get cranking, eyeball/soul harvesting and promoting.

I am not trying to cherry pick the disastrous call noted above, but gold stock bull newsletters (I thought it was a Tech letter) tend to be dogmatic. The lot of them. Perma-bulls who want you in, baby. They want you enthralled with gold’s glittering possibilities just as the perma-bears want you to ride the eternal Harvey & Erb ‘gold to $800’ train.

The thing that sticks in my craw – but was also a lesson – is that a subscriber quit NFTRH in 2016 advising me that Mr. Tech and gold was bullish gold, bearish Tech (incl. Semi) along with a list of others holding similar views. My analysis was opposite. Those herds then spent several years after mid-2016 marching to nowhere and NFTRH’s reality-based view? Well, you know. I know, I don’t tend to let go of things easily. Don’t even get me going on the late Richard Russell. That sour grape is best left now to a bye-gone decade.

Anyway, by mid-2016 is was time to scrap the gold bull view and be…

Semi Optimistic

Aside from the subscriber issue I focus on the Tech/Gold guy, who I’d never heard of until said subscriber’s note, because he has astutely marketed himself as a Tech analyst, being a veteran of the Route 128 Technology Highway. Ha ha ha… It’s friggin’ 128, not Silicon Valley. In my old business I serviced many of these companies. There is no ‘128’ as a Technology hotbed. There is just a shitty, over-trafficked highway in need of constant repair. There happened to be a bunch of companies clustered around the area. But anyway, in 2016 the usual suspects were massively on the “go gold!” bandwagon while Mr. 128 guided bearish on Tech.

Why am I so obnoxious about this? Because I hate group think. I hate uncritical thinking. I hate promotion, I hate analysis that is analysis just because somebody says so without offering valid backing evidence, I hate herds. You, financial newsletter consumer… you are the product… you, financial advice consumer… you are the product.

Not you dear reader who has put up with me for a while now. The other ‘yous’ generally out there in the financial Pimp-o-shere. In gold, that goes double. You are the necessary ingredient to get the story going and to fork over your money. The best (worst) of the “gold analyst” * herd knows this. You are guided by your emotions and a lot of story telling. You have come to gold out of fear and dynamic stories.

2003-2008 & the Current Day

During the previous period, an inflationary time when all manner of ‘resource’ assets were rising due to the bubble in inflationary policy-making, the HUI Gold Bugs index went up around 300%. This was despite degrading miner fundamentals and thus, bloating valuations. By the time the sector wheezed, rolled over and then blew up in 2008 it was a bloated pig. And do you know what? You did not hear a peep from the usual suspects. Instead, they kept you in, lathered and greedy. In short, they tended you along with the uncritical herds until finally, in Q4 2008 came the remedy by all-out liquidation.

Then? When it was time to be active and buy? Crickets. Check out the 2014 note from a reader on the upper right side bar. The wrong way “gold analyst” Corrigans were jumping on the deflation bandwagon and trying to sell that because after all, the inflation was failing, the world was ending and to boot most gold bugs think inflation is good for gold stocks. That is disastrous thinking, ultimately.

So if we are going to the next phase of the bull here and now I consider it timely to write this post. I may even save it as a website page for future reference. Some of you may not like me for it. Some of you already don’t like me. And you know what? I don’t give a shit. Some of you do like me and some of you are neutral on me. But if I keep things real in this little way station (a completely ad-free way station I might add) of the internet I’ll feel very good at the time of the next liquidation. Because the promoters are going to lead a newly minted herd to the eventuality it deserves.

So guys and girls, let’s ‘GO GOLD!!!’ and let’s ‘MAKE COIN!!!’. But let’s also remember that the clock is ticking. If 2003-2008 is close to an accurate guide it could be years until the next disaster. But there is nothing wrong with understanding the casino you are in along the way and who the dealers are. Not so ironically, the dealers are often those ranting about conspiracy because when you lose your money one day, someone has to be blamed!

In 2019 I was delighted to be able to present charts and data that indicated a severely under-valued gold stock sector. Just be aware that the pom poms are going to be waving vigorously, long after that value proposition is history.

* There should be no such thing as a “gold analyst”. You are a financial market analyst, not a gold analyst. What is that, anyway? Gold analyst = obsessive promoter of what can at times be a dynamic asset that stirs people in ways that paper assets or hogs, shall we say, do not.

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