Categories: Stock Market / Precious Metals
Topics: Precious Metals / Gold Stocks

Gold Shows Strength as Dollar and Bond Yields Rise

Despite the Fed unplugging the music at the Pivot Party, gold has held its own.

That fact that it remains bullish amid the Fed’s backtracking should instill confidence in gold’s strength.

Not only did it finally close out a calendar year (2023) above $2,000 per ounce, it has remained largely above that level for the past eight weeks and looks like it wants to consolidate those gains between $2,000 and $2,020.

This comes as both bond yields and the dollar have held their ground. Indeed, all three — gold, the dollar, and 10-year yields — are up over the past year.

Gold is showing its bedrock nature here, defying classic correlations to price in short-term fears — regional banking, commercial real estate, war and global elections, perhaps — marching onward toward the inevitably of rate cuts.

Gold stocks, on the other hand, have been weaker. A main proxy, the VanEck Gold ETF (NYSE: GDX), is down 5% over the past year while gold is up 9% — speaking of correlations being defied. 

What gives?

Higher prices that ate into miners’ earnings is an easy one to blame. 

Newmont’s Q3 earnings, for example, showed a 27.9% decrease in GAAP net income from the same quarter in 2022. That’s not exactly a magnet for generalist investors, especially when you still have trillion-dollar market cap tech stocks going up 20% in a day.

What can change it?

Well, the inverse of what’s causing it for one. And we are starting to see some downward pressure on cost inputs now. Newmont reports anew this week, and their earnings will be worth checking out.

Another catalyst could be significant upside in the gold price itself such that it generates consistent mainstream headlines. A jump to $2,100 in short order would do it. But the cause of such a move would likely be more broadly concerning.

And how can you get positioned in gold stocks before they start reflecting their leveraged nature? 

Have multiple buckets. I have safe and speculative buckets. And I have what I view as core and non-core positions in each of them.

On the safer side, you might have core positions like the SPDR Gold Trust (NYSE: GLD) or the VanEck Miners ETF (NYSE: GDXJ) I mentioned earlier. And then you might have some non-core positions in individual larger miners that you own fewer shares in.

Don’t get attached to positions.

Be nimble. 

Trade around core positions. 

Use the guidance from our premium publications for ideas or to make buy and sell decisions. 

Speaking of, we just revealed a new gold investing report from Gerardo. In it, he outlines how billionaires are positioning in gold and the specific investments they are using to do so. Click here to learn more. 

And in the meantime, if you want to see how I’m positioned in gold right now in my long-term retirement accounts, you can check out the latest issue of Foundational Profits here. 

Call it like you see it,

Nick Hodge
Publisher, Daily Profit Cycle