Wednesday, June 29, 2016

Checking My Negative Articles On Precious Metals Miners

Most recently I have published a few negative articles on a few mining stocks (some of these articles were published on Seeking Alpha and some on this blog).

However, because there is an ongoing bull market in gold and gold - related stocks, it is no sense to short these shares. Even if they are not as good as other miners, they will probably go up. Why? Because, basically, a furious bull market lifts all stocks, no matter whether the companies standing behind them are decent or hopeless ones.

Therefore the only chance to check whether my negative outlook is worth anything is to measure the relative strength of a specific stock against the broad precious metals market.

Let me check myself (and I will be doing it from time to time). And let GDX represent the broad precious metals stock market.

The following companies were awarded with my negative outlook:

  • IAMGold - article on IAG was published on June 24, 2016
  • Endeavour Mining - June 19, 2016
  • Banro Corp - January 6, 2016
  • Energold - June 14, 2016
  • Gold Resource (GORO) - March 9, 2016

Now, the chart below shows the relative strength of the above listed stocks against GDX:

Well, it looks like I have been right on IAMGold, Banro and Energold. All these stocks were weaker than GDX. 

On the other hand, I have been wrong on Gold Resource (stronger than GDX by 23.1 percentage points) and neither wrong nor right about Endeavour Mining.


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