In October, the precious metals market underwent a major shakeout as the crowded trade unwound in a classic panic. In a single session, spot gold plunged as much as 6.3%, its sharpest one-day fall in over a decade, while spot silver tumbled 8.7%, despite no specific catalyst – it looks like we’re now experiencing the second chapter. The precious metals day-to-day moves are being driven by oil, short-dated credit markets and traders’ perception of the Iran war. Whenever doubts creep into the market that Jerome Powell won’t be able to cut rates, the precious comes under pressure.
The ASX-traded GDX ETF is an excellent vehicle to gain exposure to global gold stocks, with over 80 stocks removing the frustrating operational misses that are common in the sector. It holds ~10% in Australian miners, providing diversification on both the stock and regional front. We expect a choppy ride over the coming weeks, but MM believes the underlying bull market is alive and well, and it’s time for the brave to start accumulating gold exposure.
- We remain bullish toward gold and think recent weakness is now presenting an opportunity to start accumulating.
