The bullish/bearish case for gold
More and more prominent fund managers and investors are bullish on gold, with the bullish narrative being "insane money printing will lead to high inflation and runaway precious metals prices". This has caused gold, silver, and gold/silver mining stocks to surge.
The NYSE Arca Gold Miners Index surged more than 77% over the past 2 months:
This is the 2nd largest 2 month rally from 1993-present. The only other historical case was in December 2008 when precious metals began a major bull market (2008-2011). That historical case saw gold miners rally another 53% over the next year:
Similarly, silver miners have rallied a historic 74% over the past 2 months:
The only 2 other historical cases saw silver miners continue to surge over the next 6 months:
I'd like to caution investors and traders against thinking that the case for precious metals is crystal clear. Just because XYZ happened in 2008, doesn't mean the same thing will happen today (low sample size). It's just as easy to find low sample size data that supports the bearish case. For example, the gold:silver ratio is falling right now as silver outperforms gold. This has caused the gold:silver ratio to cycle from extremely overbought to oversold territory:
Such a reversal in the gold:silver ratio led to losses for gold over the next year:
And also led to losses for silver: