• 2 hours Is A Gold Breakout Near?
  • 20 hours Federal Reserve Downgrades U.S. Growth And Cuts Rate Hikes
  • 23 hours Disney Beats Out Comcast In $71.3B Mega-Merger
  • 1 day The Feds Continue To Prop Up Equities Markets
  • 1 day Bejing's Sway In South China Sea Is Fading
  • 2 days Saudis Eye Billions As Stocks Get Emerging Market Boost
  • 2 days Airbnb In Acquisition Mode Ahead Of IPO
  • 2 days Gold Hangs At $1,300 Ahead Of Fed Meeting
  • 2 days Champagne Sales Slow As European Economic Worries Grow Louder
  • 3 days Putin Signs “Digital Iron Curtain” Into Law
  • 3 days Russian Metals Magnate Sues U.S. Over Sanctions
  • 3 days Tesla Looks To Jump Into Indian Market
  • 3 days Global Banks Lay Groundwork To Re-Inflate Asset Prices
  • 4 days Homeowners Experiment With Risky New Investment Trend
  • 4 days U.S. Tech Stocks Look Increasingly Vulnerable
  • 4 days De Beers To Expand World’s Most Profitable Diamond Mine
  • 4 days Ford CEO Gets Raise After Massive Layoff Round
  • 5 days Germany’s Flirtation With Recession Could Cripple The Global Economy
  • 5 days Where To Look As Gold Miners Inch Higher
  • 6 days Google Faces Billions In Fines From European Regulators
Lending: The Good, Bad, And Ugly

Lending: The Good, Bad, And Ugly

Aristotle said, “The most hated…

The Chatroom Cartel Running Global Bond Markets

The Chatroom Cartel Running Global Bond Markets

Eight major banks have been…

  1. Home
  2. Markets
  3. Other

Why The PM Sector is Now a Contrarian's Dream ...

Originally published August 9th, 2015.

In this update we are only going to look at one chart, because I don't want to dilute its impact by including anything else. There are many other charts supportive of a positive outlook for the Precious Metals sector going forward, which we will look at separately.

The chart we are now going to look at is the long-term ratio chart for the large cap S&P500 index divided by the XAU index for large cap gold and silver stocks. So that we can achieve a big picture overall perspective, our chart goes right back to the mid 80's.

SPX:XAU Daily 1980-2015 Chart

This astounding chart largely speaks for itself. The main point it makes clear of course is the extraordinary and extreme undervaluation of Precious Metals stocks relative to the broad stockmarket. This ratio is an amazing 9 times higher than it was at its 2011 lows! Another point revealed by this chart is that PM stocks are now much better value relative to the broad market than they were even at the PM sector low late in 2000, before the great PM sector bullmarket of the 2000's began.

Finally, the MACD indicator at the top of this chart has risen to a wild unprecedented extreme reading, which means one of two things is going to happen - either the broad market is going to drop hard soon, which we are in fact expecting, or the Precious Metals sector is going to rally, or both at the same time. Either way you are much better off in Precious Metals stocks than in the broad market.

 

Back to homepage

Leave a comment

Leave a comment