Gold Miners: Time to Scale Out?
Has the “easy” money already been made in gold miners?
We say “easy” because gold miners have gone up virtually in a straight line ever since the start of 2024.
However, we bought gold miners back in 2017/18 (thereabouts). It was far from an easy trade, particularly from late 2020 to late 2023 where they fell by some 45%!
A real fun trade it has been!
Yes, while the absolute chart may look a little “overbought.” If one considers the performance of gold miners relative to the S&P 500, then they are far from overbought!
We see little evidence of optimism, let alone euphoria, with gold miners. As an example of how popular gold miners aren’t, Newmont, the sole gold miner in the S&P 500 is sitting at number 105, with a weighting of some 0.17%!
Do you hear of pension funds investing in gold miners? Nah, they would rather be up to their eyeballs on the Mag7!
Speaking of the S&P 500, take a look at the weightings and how the investment concentration now means that the outcome of the index itself is dependent on the outcome of a handful of overvalued stocks.
This is really scary!
It is madness how rank number 30 in the S&P has a 0.5% weighting!
