Today, there is an unusual discrepancy between GDX (-1.43%) and GDXJ (-0.27%), usually it is the other way around. Gold futures are up 0.64%.
Is there something the "big money" (presumably in GDX) knows about upcoming developments in Gold or miners?
You have not talked about your position in RR? Just keeping indefinitely?
Thank you for this email which may be of interest to subscribers. Gold continues to pause around the psychological $1900 level. In any range the bullish and bearish arguments return to equilibrium.
At present the competing arguments are that gold should do well because central banks have been backed into a corner by rampant money printing and will be unable to raise rates enough to fix the inflation issue. The competing negative view is gold faces an increasing headwind for rising yields.
Gold shares currently enjoy some of the best margins of any sector. The longer prices hold around $1900 the better their balance sheets will look. That enhances potential for dividends and share buybacks which is exactly how gold shares offer insulation from inflation. As long as miners are not investing heavily in new production, they should offer leverage to the gold price.
The raw beta of the sector relative to gold is currently 1.73.
I continue to hold Rolls Royce for three primary reasons. The first is I got in at an attractive price so holding through the current range is not a burden. The second is I believe air travel will return to pre-pandemic norms; climate alarmism and short-term jet fuel price pressure notwithstanding. Since most of the company’s income is tied to service contracts, that should be positive. The last is I hold the share for the optionality it offers on the development of small modular nuclear reactors.