No one is happier about gold than China...

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Still Waiting

All of the recent bullish trends for metals and miners have reversed...and no one is happier about it than China.

The rebound has been delayed.

A couple of weeks ago, I reported on the first signs that the bottom may have been in for gold and that a new rally was in the offing.
 

The positive correlation between gold and stocks, and the metal’s inverse correlation to the Dollar Index, were weakening. At the same time, silver and mining equities had begun to significantly outperform gold, a typical leading indicator for an imminent move higher in the yellow metal.
 

Flash forward to today and...not so much.
 

Gold is once again joined at the hip with the broader stock market and other risk assets as they all jumped off the diving board over the last couple of trading sessions.

Gold fell over $100 on Friday and silver was absolutely clobbered, dropping over 9% on the day. The broader stock indices also fell, so at least we had some company in our misery.
 

It looked like we were on track for a nice recovery early this morning, but we didn’t get the expected encouraging words from the White House on Iran, and the usual Monday morning optimism quickly rotated back to pessimism.

Sometimes it’s difficult to interpret market action...but not lately. On Friday, investors expressed their deep disappointment that the U.S.-China confab resulted in precisely zero positive news.
 

As I remarked on X that morning, it “Looks like China got something it (wanted) out of the meeting — a cheaper price for all the gold it’s buying.”
 

And they are most assuredly taking advantage of the bargain pricing. Consider this timely post on X:

I don’t doubt that China’s back in the market with gusto today, and Western traders continue to put gold on the sale rack. Simply put, Western investors are back in charge of setting the price of gold for now, and they view the metals and miners as risk assets along with high-flying U.S. stocks.
 

A poster on X recently bemoaned the fact that the metals weren’t acting like risk hedges at all. I replied:

“This is the result of Western involvement in the market. Traders are only interested in the impact of events on Fed policy. War and inflation are hawkish, and vice versa, so they sell and buy stocks, gold, silver at the same time, for the same reasons.
 

“For the time being, Asian investors (particularly China) are glad to take the metals at the discounts that Western traders create.
 

“All this said, the positive correlation between silver/mining stocks and the broader equity market has weakened recently. Along with the outperformance of silver/mining stocks relative to gold, this is an interesting indicator that the bottom in gold is in.”

Well, I wouldn’t have made that last statement if I’d known what was going to happen over the last couple of trading sessions.

We’ll see soon if I was early or simply wrong. As you can see, we remain in a post-correction trading range, and my original prediction of a breakout sometime in June looks increasingly more likely:

In the meantime, I remain exceedingly bullish on the junior mining sector. I’m working harder than I have in many years, talking to companies every day in search of new opportunities for my Gold Newsletter readers. And I’m seeing a number of remarkable ones.

I’ll have some very exciting new recommendations coming up in next week’s June issue, so I urge you to subscribe to Gold Newsletter here if you’re not already a member of our very happy family of readers.
 

(As I may have mentioned, the average stock in our portfolio right now is up 3.5x!)

I also recommend that you visit our Gold Newsletter YouTube channel, where my friend Kai Hoffman does an outstanding job of interviewing some of the most impactful junior mining companies in the sector.
 

You can check out some of the recent interviews below.

All the best,

Brien Lundin
Publisher, Gold Newsletter
CEO, the New Orleans Investment Conference

P.S. As we’re about to hit “send” on this, both gold and silver have turned higher on the day. So maybe my original predictions will turn out to be accurate after all!