Gold Mining Stocks as Inflation Hedge?

They did pretty well in the '70s.

T/A from 321Gold

 

I don't know -- I just buy when the pattern looks good -- like it did early last week.

 

Interesting. He publishes a hindsight chart, dated Nov 12, after the bulk of the move is done.

Gold is not an inflation hedge. It is a hedge for a sudden and disastrous loss of purchasing power: War, currency debasement and hyperinflation, etc. as an alternative to currency.

For prolonged inflation in a growth environment, too many opportunities abound. Gold bugs will keep singing the tune of the 70s. That moment was so pivotal that it skews blind studies over longer periods of time to perpetuate the myth of gold.

Would I ever hold gold? Sure, if all currencies go digital, for the smallest of probabilities that the US goes belly up and/or I want to be able to go off-grid. But right now, a stack of dollars bills will do.

Do you want to bet against America on Veterans Day?

 

what are the opportunities?

 

I'm a recovering gold bug, but I caught the run-up a few decades ago and sense another move up soon.

 

STONKS, of course.

 

Hey, I am not saying you can't capitalize on a good trend. But, check your other filters.

Incidentally, Good companies do not necessarily mean good stocks. That's a 2nd hand quote via Richard Bernstein who cited the research.

 

You have no evidence that gold is not an inflation hedge, the historical evidence was that gold was the best inflation hedge.

Another factor that impact gold is equity market.
The worse the equity market, the better the gold performance.

 

I used the run up as a chance to unload some positions that were previously losing money, and some quick swing trades on some more active stocks. I got out of two miners yesterday which ended up being a mistake but New Gold I didn't want the earnings risk. I think the play is buy daily dips on miners that have good earnings ( it's unclear now some of them went up a fair bit in short order; Monday might still be good though ). I'd have stuck with some of them longer but I was doing better with energy and copper plays. Last week was the first week you could truly make a nice smooth return on some of the gold miners and a really good return on some silver miners. However, those same silver miners can drop fast on a turn.

 

#1 reason gold mining stocks struggled this year is the strength of other sectors. In Canada, I'd say the energy sector took a lot of speculators out of mining in 2021.