The movement in gold stocks is underscoring a nagging, persistent hunch we’ve had for the past week — the “gold lag” uncovered by our research team toward the end of last year is already closing.
The lag is the gap between the gold price and another index of precious metals mining firms, the Barron’s Gold Mining Index. Most of the time, the index trades at a level higher than the gold price. But four times in the last 33 years, the stocks fell behind.
Each time has yielded a significant profit opportunity — an average of 158%, in fact.
It turns out the Barron’s index fell below the gold price at the end of last April. Check out this chart, which runs from early April through mid-December, when our folks uncovered this developing opportunity.
There’s no telling when this gap will close and the profit opportunity evaporates. The gap existed for only a week in 1980. Other times, it’s taken up to seven months to close.
As you can tell from the charts, we’re already at eight months and counting... so in a sense, this gap is already living on borrowed time.
No comments:
Post a Comment