Chart courtesy of Stockcharts
That was the month that was for the precious metals sector whereby the precious metals stocks led the charge just pipping an outstanding performance by silver which beat gold and the DOW leaving the US Dollar to collect the wooden spoon.
It is still early days for the stocks but it is good to see them demonstrating some leverage when compared to gold and silver prices. The reason for taking on the risk of exposure to the mining stocks is to gain leverage in this bull market, otherwise it would be a straight forward play of buying the physical metal and sitting on it. Ownership of a small amount of the gold and silver is highly recommended but the less risk averse among us look to the stocks to provide greater returns. From the beginning of this bull run in 2001 this was the case until the 2008 De-leveraging sell off decimated this tiny sector as illustrated below:
There is no doubt in our minds that this metallic bull will continue to run albeit with volatile oscillations and pullbacks punctuating its ascent. However, if the chart above is indicative of what is to come then the mining sector is set to surpass previous highs by a large margin. And it is about time too! The media in general still don't give the barbarous relic anywhere near enough attention and Joe public remains in the dark about precious metals as an investment. However, the Chinese Dragon has expressed its displeasure at the dismal performance of the dollar despite Tim Geitners attempts at pacification and will accelerate its programme of diversification out of the dollar.
As and when these things become apparent gold will appear by popular demand on the front pages of the press, investors will allocate more of their funds to this sector and finally the the public will stampede into gold and its associated stocks regardless of price. When people in your place of work who have never expressed any interest in gold go out and buy a coin or two in their lunch time and show it off to you and your colleagues start work on your exit plan, until then enjoy the ride.
Have a sparkling day.
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