Gold was sold off badly in the last 2 days. I wrote two rather long emails to my colleagues today to comment on gold and mining stocks. In a gist, gold has been sold off as inflation in the west is not forthcoming. Investors are turning their attention to dividend stocks and high yield bonds.
For the mining sector, I looked at the inventory of copper. It's at a high that was seen in 2007 and 2011. Hence the chart for copper is negative for the next two to three months. Thus, revenue for mining companies is likely to be flat or down slightly. But profitability is so bad for these companies that EPS is falling too. Valuation wise, price to book is near 2008 levels.
Hang on to your horses. Lighten up on equities. Don't buy any more gold. Sell on strength.
