Robert Sinn, aka Goldfinger, founder of Trading Lab, and editor of Energy & Gold, joins us to discuss whether or not gold is good for anything, and if commodities are in a secular bull market. We start off discussing the terrible sentiment in the precious metals sector at present, and how some of the narratives around why the PMs are doing well or doing poorly are often at odds with what we see play out. Robert notes that gold did very well from 2019 into 2020 when the forward looking markets anticipated the inflation that would arrive as a result of M2 new money supply, and within the backdrop of declining real rates when interest rates starting sliding lower and lower.
Next we shifted focus to the resource stocks, and made the important point that most of the junior mining stocks are not longer term “buy and hold” type of equities. Due to their extreme amplification of the cyclical and volatile nature of the underlying commodities, most are best traded by accumulating during weak oversold periods, and by selling during strong overbought periods. Robert mentioned that the gains in junior mining stocks can be fantastic and go up multiple-fold during bullish cycles, but can be terrible and go down swiftly during the bearish cycles, more so than general equities indexes.
Robert then remarks that while he does believe we are in a longer-duration secular bull market in commodities, that they need to be separated by sector and individual company macro fundamentals and technicals, as each commodity or company can have very steep and sudden corrections within a larger bullish uptrend. We used lithium, copper, and oil & natural gas as recent examples of such volatility to both the upside and downside. He also was bullish on the equally volatile biotech sector for it’s favorable set up at present, and recent outperformance of the general equities. We wrap up by finding out if Goldfinger thinks we may see a bounce anytime soon in the gold stocks. He points to the pattern of 6 weeks down in GDX as only having happened twice before since it’s inception, along with this time of year’s seasonality for bottoming, and the recent bad earnings call out of Newmont (NEM) as indications we may be near an oversold bounce.
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