Gold Stocks Are Still Lagging The Broad Market For Now - Mike Swanson (07/06/12)


Gold stocks are still lagging the broad market and the metal for now. We saw a nice bounce in the stock market last month that probably will continue for a few weeks at least. Gold stocks bounced too. At first they bounced hard in May, probably due to the fact that they simply had fallen so bad over the past year that they had gotten themselves to a super lower valuation with many of the major gold miners trading with PEG ratios below .50.

They were due for a big bounce and they did bounce hard in May, but in June they actually finished the month down while just about everything else went up.

Gold stocks haven't even rallied enough to take back 1/3 of their losses that came from their September-April slide.

What this means is that gold stocks are not acting as one of the leading sectors during this current stock market rally.

They may indeed have put in a major bottom in May, but if so they are simply in the process of building a recovery base at the moment - which could last a few months - before they finally put on a real sustainable rally that puts them into the category of being a leading market sector again.

This will happen eventually, but it isn't today.

I think at some point this month or next the broad market will put in another top and go through another correction. If gold stocks hold up during the next broad market correction they will be telegraphing to us that they are going to finally become a market leading sector again.

I expect they will at some point. I think the European crisis is going to break open again in the Fall and finally come to an end. Once it does people will stop worrying about slowing economies and debt problems and start to focus on the inflationary effects of bailouts and money printing. I think gold will once again become the big story in 2013 and the years to follow.

But right now gold is asleep. Gold stocks are still in a recovery mode form the big September-May slide. I personally don't have any positions in them but plan to have a bunch before the year is over.

People on TV tend to only talk about specific market sectors after they have already gone up a lot and everyone is excited about them. So hardly anyone is talking about gold. I don't want you to forget about it. If the market corrects later this year again and the gold stocks hold their lows then you'll know that big things will be in store from them. If so you'll be one of the few who do.

But you have to keep your eyes on them to know this. And don't forget. Almost everyone already has forgotten about them already.

One smart member of this site posted a link to an interesting overview of what his happening in the financial world and where things are likely to go. I gotta say the views are pretty much the same as my own. It's worth reading:

http://wallstreetwindow.com/node/6360

for more:

Podcast: David Frazier On Why QE Is Not Likely And What It Will Really Take to Turn Around the Economy - Mike Swanson (07/03/12)

Podcast: Chris Vermeulen of TheGoldandOilGuy.com Discusses the Potential Bull Flag for Gold Stocks and Key Pivot Points for the S&P 500 - Mike Swanson (06/26/12)

Podcast: Dave Skarica on Europe, Greece, and Gold - Mike Swanson (06/21/12)



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