SEA CHANGE
I commented on it a while back when gold first got a "mention"... in popular media.
Fast Money on CNBC just now.. has been talking gold for the last 5 + minutes...
Has outperformed the S&P since 1997... better returns with vastly lower volatility and risk...
Both up ~641% in that time... versus the gold stocks... which are unchanged (up only 55%) in that time... ?
They're now saying "buy gold stocks"... but, still can't say "why" they've under-performed the metal so much ?
One suggested... inflation... also suggesting (as is true) the change in the S&P is mostly inflation, not gain.
But, (without the nod to Rick Rule that is due) they're also saying the problem is the companies are inefficient... which, of course, must be true when the combination of excessive regulation and restrictions in capital allocation force them to be inefficient.
No company can, by itself, somehow make discovery and development "efficient"... making it take a year instead of a dozen years... while spending $ more efficiently... and while putting the $ saved into funding greater operational efficiency ? Reality is... you pay to keep them alive for a decade... while the government obstructs them... and then... only a small fraction will proceed past that set of hurdles... as there's not enough money to fund more...
And, of course, what is true of producers... is true in spades of explorers...
They will, as always, lag... until the market figures it out... and chases them...
Proven producers generating profits... when other industries are not... comes first.
The moves we've seen thus far... are the same old "mining investors" trading the trends... not the trend we will see in miners becoming... the hottest trade in the market... the talking heads all suddenly becoming mining experts, etc...
But... while that's a cyclic issue... it shows "the cycle" has been stretched a decade beyond "the bottom" following the prior cycle... while gold has been suppressed by central bank manipulation... as miners have traded lower, and lower... We're now at the point of imposing "can't get there from here" in limits... that are not just limiting the pace in future growth... but ensuring shortages in materials requiring that we can't sustain the economy we have...
That means... massive inflation is coming as production bottlenecks in materials ensure fewer goods are able to be produced...
Stag... and flation... worse than the 1970's... thoroughly baked into the policy we have.
Big moves today... still trending WITH the market... driven by the Brrrrrrrr...
When stocks fall... and gold and miners move higher against market trend... that's "the beginning"...
Where we are now... is the beginning of the end for markets and the currencies...
Ugliness yet to come... in the miners as they're trading with the markets |