“[T]he average price in April (with two more months to go in Q2) is around $260 higher than in Q1.” -Fred Hickey
Today:
Premium: Why Fred Hickey Likes Miners Now
Commentary: 1970s and 2000s analogs
Markets Yesterday:
US equities continued to rally on Monday after Friday's weaker than expected jobs report as investors consider the timing of Fed rate cuts.
Premium/Markets: Mining’s Mixed Analog
The overlap for Gold and mining stocks currently has a mixed historical parallel. We note the monetary policy situation is very much like the 1970s. The other part, the market dynamics are very much like the 2000’s as Fred Hickey notes.
The Monetary Policy Parallel:
The ideological backdrop and monetary policy that is a result of that ideology is extremely similar to the 1970s. Excerpts from the 1979 paper pictured confirm this
Philosophical and political changes caused the inflationary environment…
There was a desire for a more interventionist govt policy…
Which became reflexively embedded in societal expectations
Well intentioned environmental policies added to the inflation.
Entitlements diminished the work ethic of the labor force
Demographic changes in the workforce made it difficult to understand what the appropriate level of “full employment” was…
[Central Banks'] practical capacity for curbing inflation that is continually driven by political forces is very limited.
Much more on that in a separate written post later.
As a segue to the policy parallels, here is Mr. Hickey citing his reasons for the Gold bull market:
There are several factors driving today’s gold bull market including: a loss of faith in central bankers worldwide following their coordinated money printing (currency debasement) programs in recent years to fund massive government deficit spending; U.S. actions to “weaponize” the dollar (the global reserve currency) against their enemies; the collapse of investing alternatives (real estate, stocks) in China and the revival of inflation.
As far as reasons for mining’s low valuations, we only have to go back to the 2000’s according to Fred.
