The Prospector News

Jordan Roy-Byrne – “The Mistake Many Could Make with Gold Stocks”

You have opened a direct link to the current edition PDF

Open PDF Close
Uncategorized

Share this news article

Jordan Roy-Byrne – “The Mistake Many Could Make with Gold Stocks”

 

 

 

 

 

The Sahm Rule recession indicator has been triggered. The yield curve (2s and 10s) has finally un-inverted, which, if it steepens aggressively, is a sure-fire recession signal.

 

 

Out come the tweets and subscriber emails about buying gold stocks after the downturn.

 

 

After all, the precious metals sector has performed poorly during the last three bear markets in stocks.

 

 

However, investors, speculators, and even gold bugs are falling victim to recency bias. This cognitive bias favors recent events over historical ones and gives greater importance to the most recent events.

 

 

The current context for precious metals is completely different than it was heading into the last three bear markets for stocks.

 

 

In fact, the current context is most similar to the two points in history when precious metals diverged from stock market bears.

 

 

As the chart below shows, Gold and gold stocks trended higher during the bear markets of 1972-1973 and 2000-2002.

 

 

That negative correlation transpired as Gold broke out against and outperformed the 60/40 portfolio, which confirmed a new secular bull market. This is the major development we have been anticipating.

 

 

It is all connected.

 

 

Gold will have no acceleration phase until it breaks out against the 60/40 portfolio. That requires a bear market in the stock market.

 

 

Precious Metals will diverge as capital flows out of conventional stocks and into precious metals, which are massively under-owned relative to conventional stocks.

 

 

The divergence or non-correlation transpires only around the beginning of a secular bull market because precious metals are so under-owned and there are so few sellers.

 

 

In early 2008, all Gold ETFs amounted to 4% of all ETF assets. Several months ago, that figure was barely more than 1%.

 

 

Sure, there would be some selling and corrections along the way. There were multiple 20% declines in gold stocks during 1972-1973 and 2001-2002.

 

 

Rather than panic selling out of positions, one should take advantage of market-induced weakness. Tweak your portfolio and focus on the high-quality juniors that have the most value and upside potential.

 

 

To learn the stocks we own and intend to buy with at least 5x potential over the next 18 to 24 months, consider learning more about our premium service. 

 

Posted September 7, 2024

Share this news article

MORE or "UNCATEGORIZED"


GR Silver Mining Extends Silver Mineralization with Step-Out Drilling at San Marcial 11.9 m @ 226 g/t Ag Eq* including 0.9m @ 716 g/t Ag Eq

GR Silver Mining Ltd. (TSX-V: GRSL) (OTCQB: GRSLF) (FRANKFURT: G... READ MORE

July 25, 2025

Big Ridge Gold Corp. Closes Upsized $5.2 Million Private Placement

Big Ridge Gold Corp. (TSX-V: BRAU) (OTCQB: ALVLF) is pleased to a... READ MORE

July 25, 2025

St. Augustine Closes Private Placement

St. Augustine Gold and Copper Limited (TSX: SAU) is pleased to announce ... READ MORE

July 25, 2025

GoldShore Intersects Additional Mineralization Beneath the Conceptual Open Pit at the Southwest Zone with 22m of 1.30 g/t Au

Goldshore Resources Inc. (TSX-V: GSHR) (OTCQB: GSHRF) (FSE: 8X00)... READ MORE

July 25, 2025

Benz Announces Closing Final Tranche of A$13.5M Financing

Benz Mining Corp. (TSX-V: BZ) (ASX: BNZ) is pleased to advise tha... READ MORE

July 25, 2025

Copyright 2025 The Prospector News