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!