Gold surges another $US100 but stocks lag
Gold is surging higher again this morning, moving $US100/oz in both directions almost on a whim. Early on this morning the precious metal tested $US5,600 before trading below $US5,500 as we type.
The parabolic advance by precious metals feels like its accelerating but the underlying stocks are not as enthusiastic. At MM we take two important read throughs from the current price action:
- We have no interest in chasing the current advance in the metal and related stocks/ETFs around $US5,500.
- However, when gold does take a rest, or pullback, there will be strong valuation support for gold stocks into dips.
Gold stocks are set to be cash cows in the coming years assuming the precious metals can hold above $US5,000 reminding us of the coal stocks back in 2022 – dividends and capital initiatives are likely to come to the fore.
MM is long and cautiously bullish towards gold stocks
