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They have served as a leading indicator in the recent past and might suggest some upside, according to CLSA’s Chief Equity Strategist Christopher Wood.
“...the action in the gold mining stocks is serving as a useful lead indicator for the price of bullion, with Newcrest Mining, for example, up 30 per cent year to date.The gold mining stocks were certainly a lead indicator for the decline in the gold price last year,” he said in his periodic ‘Greed and Fear’ report, dated February 6.
Those who had taken a contrarian call on gold would have been well rewarded, it added.
“What is clear is that anyone who wanted to construct a truly “contrarian” portfolio, positioned the opposite to the consensus at the start of 2014, would have included a large weighting in gold mining shares, as well as a large weighting in the 30-year Treasury bond. So far, at least such a strategy would have worked with the gold mining index up 7.9 per cent in US dollar terms and the US 30-year Treasury bond price up 5.9 per cent so far in 2014,” he said in the report.
