Venture Gold Update
Issue 92;
With the recent correction in the gold price, I am updating ByteTree Venture clients on the gold mining stocks. On the face of it, the gold price correction of 6% is modest, but what took investors by surprise was its speed. The price of gold had traded 33% above its 200-day moving average, which is not something we see very often.
Gold Deviation from Trend since 1975
Gold is still in a strong uptrend, but previous overbought situations have normally led to a period of consolidation. We have also seen a rise in implied volatility, which reflects greater uncertainty. A spike in volatility normally signals a trend reversal, in either direction, but it isn’t necessarily large.
The Gold VIX
I would also highlight that the gold miners started to correlate with the equity momentum trade, having been a diversifier before the tariff crash in April. Recently, the gold miners have been moving alongside AI, robots, and blockchains. I had no idea that gold mining was such a high-tech sport.
Gold Miners and Momentum Stocks
Moving on to Venture’s gold-related stocks, the correction appears to have been savage, with the gold miners’ index falling by 16% by yesterday morning. But bear in mind, it had rallied by 141% this year, and 109% since the April low.
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