First, a disclaimer. I love gold, gold miners and the precious metals space as investments right now. At the time of publish I own NUGT and JNUG. I think the market is missing huge technical signs from the group. Of course, a downtrending market and global currency war (even though the market has somewhat ignored that truth) help the fundamental case.
Howard Marks has made the idea of 'second level thinking' infamous in his book and in his recent memo.
Here are a couple of blurbs from the memo that really relate to investing in gold and precious metal space these days:
Common rhetoric as to why people don't like gold here is well, it's not acting like a safe haven asset during all this market volatility.
Let's quickly think about why gold hasn't acted as a safe haven
- Oil's decline has been a top headline in the back half of summer. Many commodity funds made up of Oil also own gold. When those funds see outflows, they don't just sell oil, they sell everything.
That said, Gold is outperforming the S&P 500 since early August when Gold bottomed. Note the 200D MA has flattened out as well. So yes, gold is acting like a safe haven, even though it isn't readily apparent to most market participants.
- It's the most despised asset class out there. The precious metals space is the only group that hasn't paid to own during the massive post 2011 bull run. Other than sophisticated investors noticing the technical bottoms and massively changing investment landscape, who the hell wants to run into the space with both hands?
As many great investors allude, if you want above average returns you have to think differently than the crowd. That surely doesn't guarantee outperformance, but it sets you on the right course.
What do you think, are the precious metals
Thanks for reading, trade 'em well!
No comments:
Post a Comment