The Trump trade
In the mean time Donald Trump has been elected president of the US, taking office in Januari 2025. The Trump trade has caused gold to drop about $220 from its high to 'bottom', closing at $2.562.3 on Nov 15.
Both the peak and the dip were short lived. On Black Friday Gold closed at $2649.1, which is more or less where the yellow metal traded mid October ($2648.7 on Oct 14).
But do we have a 'zero sum game' over the last seven weeks? Miners once more lagging prove it isn't.
Gold over last 3 months ('continuous maturity contract')
The Hui index (Basket of Unhedged Gold Stocks) over last 3 months:
The HUI index bottomed lower on Nov 15 than it did on Sep 9, when gold was at only $2507/oz.
HUI to Gold ratio over last 3 months.
The HUI/Gold ratio was trending down well before Gold reached its peak. Miners were losing momentum and started lagging gold. It only got worse once the sentiment in the Gold market really deteriorated, after the Trump electoral victory.
Political turmoil may be beneficial for gold, but since it is generally perceived to be a temporary driver for the price action, miners have a tendency to lag the gold price rise under these circumstances.
Whenever the gold price retreats, miners again leveerage the downtrend. This may last until a more 'sustainable' driver for the gold price takes the upper hand in the heads of traders. The FED policy, long term interest rates, the USD index, the CPI. Give them the familiar ingredients and traders will tell you where the gold price will go or should go or should have gone, if they are completely off track.
Predictably this will once more affect the latest linear regression relationship which has been put in place earlier this year in the article: Will miners ever cease lagging gold?
Updates of the Gold Miner Pulse page and the Miners' Performance page will follw when I regain full control on graph insertion.
No comments:
Post a Comment