A golden rule on mining stocks – By Thomas Andrieu.
In this brief article, I would like to insist, as I explain in my next book on gold and silver, on an interesting economic reaction of mining stocks, and more especially of gold equities.
Interest and gold equities
Here is a graphic including Barrick Gold, Gold and FED interest rate. For 40 years, there is no doubt that each time FED interest were at the top, gold equities were interesting to buy. It has been the case in 1989, 2000, 2006, 2018. Each example has been followed by a strong bull market generally lasting for 4 or 5 years. The comparison is also right for indexes like HUI, etc…
As a result, over the next few years, as my forthcoming book on gold and silver explains, we should see very good performances in gold equities (at least similar moves from 2008/2011 through in 2023/2024). The 2018 signal was crystal clear.
The first explaination is about economic cycles. High interest rates mean economic tensions coming soon. Each economic contraction means monetary creation, more systemic risks, higher gold, and better yields for gold miners. Gold equities are a very good alternative in times of crisis. It is a simple correlation that has no reason to change on this decade. The 4/5y period of bull market that follow (generally including a correction), is explained by the growth/real rate tension (noticeable after all recession), what is directly benefiting to gold price, and gold equities for years. For more informations, please follow me for my next book on gold and silver.
Remember : here is a golden rule on mining stocks !
By Thomas Andrieu – Author.