Submitted by QTR's Fringe Finance
Markets have been volatile over the last several weeks, with selling pressure spreading across tech stocks and speculative assets. Gold and miners have been no exception, with the latter getting caught up in the broader liquidation and suffering significant selling pressure of their own.
While still beating the NASDAQ by about 6% over the last 3 months, miners are down -16.5% in the last month, plunging far more than the QQQ’s which are down just -5.75% in comparison.
I thought it would be a good time to take a few minutes this morning to explain that personally, this is precisely the type of environment I have been anticipating for years (gold and miners plunging alongside a risk selloff), and it does nothing to change my longer-term bullish outlook on gold and gold miners.
What we’re seeing is entirely consistent with the thesis I’ve been laying out over the last few years, though the thesis is far from being proven right.
For years, I’ve said that if we experience a genuine market crash, I expect gold to sell off alongside equities, and I expect gold miners to get hit even harder. The reason is simple: when markets begin deleveraging in earnest, investors don’t sell what they want to sell. They sell what they can sell.
Margin calls need to be met. Leverage needs to be reduced. Cash needs to be raised. And in that environment, even fundamentally attractive assets can get thrown overboard indiscriminately. Gold is not immune to this process, and gold miners, which are ultimately equities with operating leverage to the underlying commodit
