Market Jitters Are Lifting Gold Miners

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Gold miners are the only winners in this market as mounting worries drive investors to the ultimate safety play.

The Dow Jones US Gold Miner Index ($DJUSPM) has gained 5 percent in the last month. That makes the best performer — and only real gainer — of more than 150 industry groups available on the TradeStation platform. See the RadarScreen® below.

There seems to be a “perfect storm” of catalysts favoring the industry:

  • Fears of weaker economic growth and fewer interest-rate hikes tends to be positive for precious metals. The selloff in oil also reduces inflationary pressures. Remember, gold’s last big rally in early 2016 followed a similar drop in energy prices.
  • Political uncertainty is swirling with the federal government in a partial shutdown. Washington is only now entering a period of divided government as Democrats take control of the House of Representatives in the New Year.
  • Political uncertainty remains a factor in U.S. relations with China amid efforts toward a trade deal. There have been minor signs of progress, but investors may fear more dramatic moments before the March 1 deadline for tariff increases.
  • Political uncertainty continues to worsen in the U.K. with an exit from the European Union approaching on March 29.

Unlike industry groups such as technology or financials, there aren’t a ton of super-active symbols in precious metals. Traders mostly focus on the Market Vectors Gold Miners ETF (GDX) and gold futures (@GC). If interest continues to grow in the space, some of the big miners and silver will likely see increased volumes. Keep reading Market Insights for more on this trend in 2019!

Linked RadarScreen® and Chart Analysis (weekly) showing relative strength of gold miners ($DJUSPM).
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David Russell is VP of Content Strategy at TradeStation. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.