Europe and the US thaw up after some severe winter weather. Winter frost continues however for gold and silver miners. Not only has gold retreated $317 or 12.5% from its early August all-time-high, gold miners have been lagging: the HUI miners index slid 27.5% over that same time stretch.
The usual approach on the Gold Miner Pulse page is to show a HUI/Gold plot over last 6 months. We extend this to nearly 8 months: July 2020 – Feb 2021 to fully capture the topping of precious metals and miners early August.
|Basket of Unhedged Gold miners (HUI) relative to the gold spot price over 8 months (click to enlarge)|
Miners were relatively strong while gold was nearing its 2011 ATH after mid July. Gold breaking above $2000/Oz was however met with disbelief and miners were lagging any further ascent of the gold price. From September till now, the HUI/Gold graph is putting down lower tops and lower bottoms, leading to the 0.1483 reading on Feb 19. HUI/Gold put down a ‘death cross’ soon after new year, when the 50 dma slid below the 200 dma.
|Basket of Unhedged Gold miners (HUI) relative to the gold spot price over 12 months (click to enlarge)
The HUI/Gold graph put down a death cross right at the bottom of the market at record low valuations for miners. The rapid recovery lead to a golden cross (50 dma rising above the 200 dma) by the end of May. That proved to be a decent buying opportunity after the initial recovery rally fizzled out and before the gold rally started picking up steam. This also puts the recent downturn into perspective: panic is a long way off, but a grinding downturn also makes investors weary.
|Global X silver miners ETF, SIL relative to silver since July 2020 (click to enlarge)|
Remarkably silver miners start weakening even before silver reached its 7 1/2 year high early August. By end Sep 2020 SIL/Silver put down a death cross. Paradoxically the early Jan 2021 peak of SIL/Silver coincided with silver sliding shortly to $25/Oz and miners upholding better. The attempted silver short squeeze also impacted heavily shorted miners significantly which lead to a modest and short lived rise of SIL/Silver early February. Silver miners eroding further, relative to the silver metal price doesn’t bode well for the near future.
|Global X silver miners ETF, SIL relative to silver mid Feb 2020 (click to enlarge)|
Canadian Gold and Silver Mining indices
The silver mining index was the first to break above parity, despite silver about flat from where we started over 10 years ago.
|GMP list based (and capitalization weighed) gold (yellow dots), silver (blue) and equal weight (red) miners indices. Reference 1000 on Nov 19, 2010 (click to enlarge)|
|GMP Miners sorted by loss to gain since inception on Nov 19, 2010. Note that the top 12 miners are left out to avoid excessive scale expansion Click to enlarge|
There still are 6 miners/explorers losing 90% or more, with 3 thereof down over 95%. At the opposite side 35 miners now are quoting above their Nov 2010 mark, (again) led by Aura Minerals; 16 stocks have doubled. The top 12 miners are omitted in the above graph to avoid excessive scale expansion, but you find the top-14 in full detail below:
|GMP elite miners, sorted by gain since starting observations in Nov 2010 using a logarithmic view with ticks 100% apart, (Click to enlarge)|
Related blog articles
Several more detailed articles focusing on the longer term have been published. These are using the same approach as this blog page and still are a good read to grasp the historic perspective:
- Miners relative to precious metals: a tactical approach; (July 2, 2012)
- Miners relative to precious metals: An update on 2012; (Jan 13, 2013)
- Anatomy of a gold miner bear market (Dec 30, 2013)
- Three year slide of precious metal miners (Dec 31, 2014)
- Gold miner bear market starting its fifth year (Jan 3, 2016)
- Precious metal miners relative to metal prices (Dec 31, 2016)
- Precious metal mining in 2018: a dark cloud with a silver lining and 2019 outlook (29 Dec 2018)
- Gold Miner Pulse 2019 (half-year update) (Jul 1, 2019)
- Precious metal and miner 2019 overview and outlook for 2020. (Dec 31, 2019)
- Gold Miner Pulse – Friday March 13 (Mar 13, 2020)
- Gold Miner Pulse – October 2020 update (Oct 10, 2020)
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