We have said it repeatedly in the last couple of weeks. Gold and silver miners are so oversold that they are ready for a big bounce. Yes, they can drop to even lower levels in the short term, but the bear market is of epic proportions, and a return to the mean is inevitable.
Note on the first chart how the standard deviation on the 3 month and 1 year performance is even deeper than the readings at the end of the 20-year bear market of the 80ies and 90ies. Next to that, the spread with the 200-day moving average is unusually large. Chart courtesy: Short Side Of Long.
Moreover, and even more interesting, the standard deviation of the 3 year performance is even worse: not seen since the inception of the Philadelphia Gold Mining Index, i.e. since 1985.
These are truly epic levels. At a certain point, there simply is nothing left to sell, given all the selling in the last years. If no sellers are left …
Based on investing sentiment in all stock market segments it appears that gold miners have the worst readings. In other words, nobody (really nobody) wants gold miners anymore. We are passed the ‘puke stage’, and arrived at a point where only fools or idiots are buying gold miners.
Well, dear reader, that is the time when truly brilliant investors start stockpiling. People like Stan Druckenmiller, George Soros, Marc Faber, have been buying gold mining equities in the last couple of months. When there is blood in the streets … whic is exactly now … true contrarian investors are stepping in and buying with once-in-a-decade discounts. This is the time.