Gold

As you’d expect, there has been positive activity in the Gold sector. It may be surprising that relative strength was occurring here even before the recent market volatility.  As we look at the relative performance of some major sectors, it wasn’t obvious that gold stocks were outperforming the overall market (as measured by the Nasdaq).  Tucked away as a subgroup of the Materials sector, there didn’t appear to be any relative strength.

2020-04-09

But drilling down into the constituents of the materials sector, we find the subgroup of gold and gold stocks. From this analysis, we can clearly see that most gold issues have tracked the performance of the Nasdaq over the past half year, if not outperform in the case of NEM.

2020-04-09 (1)The market’s recent sell off has actually increased the gap in relative performance.  While it’s possible that further strength in the general market may quell demand for gold related issues (generally bought as a hedge against inflation and other scary scenarios) their relative strength over the past few months may instead be giving a buying opportunity on pullbacks.

NEM has been the strongest of the gold stocks and many individual stocks fail to track as well as it has.  Nevertheless, there are some strong relative strength issues to be considered.  A partial list includes: NG, GOLD, KGC, FNV and AUY.  

All of these issues are on the positive side of their trending averages and thus pullbacks should be in the context of an uptrending market. As always, individual issues will need specific analysis, otherwise an index fund may be the best proxy.

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