Gold Is Up Lately. Why Does It Feel So Disappointing?

Since December gold (light blue line) has outperformed the average stock (dark blue) by a nice margin.

So why does this feel like such a let-down? Because the stars were aligned for a much bigger move. The structure of the late 2018 futures market had speculators historically short - which normally portends a big price increase. January is also the seasonally best time for gold and silver, since that's when Asians stock up on jewelry to give at Spring weddings.

Meanwhile, gold and silver mining stocks had had a brutal 2018 and were poised for at the very least a nice bounce once tax loss selling ended in late December.

This was, in short, a set-up resembling early 2016, when precious metals jumped and mining stocks soared. The following chart shows the HUI gold mining stocks index more than doubling in the first ten months of that year.

But instead, we get this tepid move up in precious metals and an actual decline in mining stocks. On the following chart the purple line is the HUI:

It's still early in what could yet be a strong first half (before seasonality turns negative and everyone starts saying "sell in May and go away"). And the deeper fundamentals - soaring debt, an ever-more-dovish Fed, insane politics - remain wildly positive for precious metals.

So patience is still in order. But jeez, some action would be nice.