Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Michael A. Gayed, chief investment strategist and co-portfolio manager at Pension Partners, wrote at MarketWatch in August that gold stock where in for a huge bounce on the back of a return of inflation to the economic scene.
Gayed’s prediction – his firm specializes in ATAC (Accelerated Time and Capital) strategies focused on inflation rotation – turned out to be on the money.
A similar forecast in September did not pan out however writes Gayed, but now gold stocks which have been chronically lagging the upward moves in physical gold, could once again be positioned to move higher:
Given that we are nearing the end of the “Fall Catalyst” period, the trend in underperformance appears to not be the best way to play a continuation of a stock move higher (aka the return of the melt-up).
However, much like a big buying opportunity occurred on the ratio bounce that led to the big move in August, such a trade may soon come. This remains a price relationship to watch ahead of what could be another one of those “rip-your-face-off” type rallies in a specific group that can be volatile, and profitable for the nimble trader.
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