The gold stock sector is playing very well today, not because its prices are up (trends are still down) but because it is doing the opposite that broad stocks are doing.
The whole correction from August was to get the miners out of positive correlation with the risky casino. It has been an extended contrary situation where stocks have continued to trend upward while the miners go the other way since August. As a portfolio balancer, I like that.
I added FNV on Friday and today I added a small explorer. Speaking personally, and since I can tolerate more downside I want to slowly be picking off some favored situations – whether established or speculative – with the mental support of seeing the gold sector fairly reliably contrary to the stock market. I even thought about adding some short to medium-term Treasury bonds under that same theme.
Anecdotally, I received an email from a subscriber who is very familiar with gold forums where bugs put on display their emotions toward gold and the miners. He says that sentiment is “remarkably low” and…
“It is as if they were all forced to read the same script or were responding to the same signals with similar electrodes implanted in their brains.”
I am a guy with charts. They indicate lower prices to come. I am also a guy with a brain and a contrary orientation. As we’ve been noting for a few weeks now, the risk vs. reward from a sentiment perspective is good.
So, not being able to predict the future I am adding here and there just make sure I am not getting too cute with this correction. Oh and by the way, I have a guy semi-trolling me on Twitter about how short he is on gold stocks and the killing he is going to make. Nuff said.