Gold Stocks Counter Cyclical
- Gold miners ended a long bear market in 2000 as the 'real' price of gold, as measured against the broad commodities index (Gold-CCI, bottom panel) bottomed and then turned up.
- Gold-CCI then began 6-year phase of mostly flat lined consolidation. This occurred while gold stocks merrily went higher (even though gold declined vs. major gold mining cost driver crude oil) along with cyclical items like the CCI and the stock market (S&P 500). The HUI index of gold mining stocks' topping pattern of 2007-2008 was fundamentally justified. There was no conspiracy against gold stocks.
- A huge and readily identifiable opportunity cropped up in the massive liquidation of 2008 after gold stocks crashed even as Gold-CCI took an impulsive leg up.
- Then gold stocks rose once again during another phase of consolidation in Gold-CCI. HUI made new all time highs against consolidating (at best) fundamentals in 2009-2011.
- HUI then topped out despite a ramp upward in Gold-CCI as a confusing phase marked by dysfunctional market indicators (speaking personally) took hold.