Whenever In Doubt, Zoom Out - Gold & Silver

JC Parets
May 7, 2020

When we talk about "Precious Metals", it can mean a lot of things. You've got the metals like Gold and Silver, which are behave very differently at times, and you have the stocks with all sorts of market capitalizations. There are a lot of ways to describe the precious metals space, so let's get into a little bit of that today.

Here is a chart of what this group looks like this year. Notice the outperformance from the Gold Miners Index Fund, almost twice the performance of the metal itself. The little guys and silver in general didn't perform nearly as well:

Click on Charts to Zoom In

I don't like giving a high weighting to year-to-date data, so let's zoom out a bit. Here is the 1-year performance of this group. Notice the difference between metals and the S&P500:
You can see Silver didn't get the memo either.

I'd also like to point out that this data is skewed a bit because 12 months ago just so happens to be the beginning of a monster rally in the whole precious metals space.

So let's zoom out further and go back to the January 20th 2016 stock market low. I think that's a fair starting point because it was when the most amount of stocks bottomed out after the 2015 bear market, which coincided with the start of the rally in precious metals.

Again, where's Silver?

Also, look at the tremendous outperformance from $GDX and the fact that the Junior Miners basically kept up. which I think is impressive.

For me, the relative strength speaks for itself. I think we stick with what's working. If the laggards start to outperform that's probably great for the whole metals space. We outlined all the stocks we like in the sector here (Premium).

What do you think?

Feel free to share your thoughts with us!

JC

 

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