Gold mining returns have never been worse than this

Gold mining returns have never been worse than this

by Tiho Brkan, The Short Side of Long

Gold mining returns have been awful over the last 3 & 12 months

Source: Short Side of Long

I’ve been getting a few emails with requests to write about the Precious Metals sector. Coming into the FOMC decision, in the previous blog post, we summarised the price and 12 month returns for major global asset classes such as US stocks, EM stocks, US bonds and Gold. Today we turn our attention on a minor asset class, which is undoubtedly one of the most oversold and hated investments in today’s financial market conditions – Gold Mining equities (NYSE: GDX).

Performance over three and twelve month time frames, together with sentiment and breadth readings, all indicate that the mining shares are most likely ready for a relief rally. Furthermore, the price of the mining equities has recently tested a major support level dating all the way back to year 2000. There should be buying interest right here and that is clearly seen by sky high volume in various ETFs such as (NYSE:GDX).

Finally, this weeks FOMC decision to keep rates on hold has become a headwind for the US Dollar and might be a temporary tailwind for the precious metals sector.

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