I used to be a gold bug

March 8, 2022

Not many people know this, but I used to be a gold bug way back in the day.

Mid-2000s and into the financial crisis and beyond?

I was Mr. Gold Bug.

Any good technician was. That's how price told us to behave.

But then a funny thing happened. A combination of price and common sense proved that being a gold bug was no longer a good idea. That was about a decade ago.

And you know how humans are. Many of those angry little buggers stuck around and held other people's bags this entire time, while stocks and other risk assets have ripped making everyone rich, except for gold bugs.

It's funny how life works.

Because I think we might be back.

It's hard not to be in the Rocks > Stocks club these days.

Here's a good chart showing what's going on:

This is the Equally-weighted Nasdaq100 Index Fund now back below its 2018 highs, relative to Gold. And then the Equally-weighted S&P500 not even able to exceed those former highs.

As long as we're below those former highs in these ratios, it's still a Rocks > Stocks strategy.

I mean, Wesdome keeps rocking. New all-time highs today:

Sibanye Stillwater is also flirting with a breakout to new all-time highs.

Are you going to fight this trend?

If we're above those 2016 highs, how could we have any respect for ourselves if we're not long this stock?

The levels are well-defined.

We're seeing more and more metals stocks breaking out and showing relative strength. And it was just the base metals before, but now the precious metals are joining the party.

Do you like to party?

Cause you know there, 'Ain't no party like a Gold Bug party 'Cause a Gold Bug party don't stop....'