Earlier this year, this thread opined that risk reward probably would favour Gold over lithium stocks, and I wasn't wrong.
YTD, this is how they have performed
GOLD Gold +13.33% XGD +6.45%
Lithium PLS -3.80% MIN +0.29% LTR -32.12% LTM -23.14% IGO -21.44% CXO -42.0%
I suggested that the tables have been turned - that Gold was coming out of winter hibernation and Lithium was going into one (winter hibernation).
It took Gold stocks almost a year to get out of it, and lithium stocks would have to endure a similar period or likely longer. The reason for that is that lithium being beholden to EV would be susceptible to a recession while Gold benefits from it.
And while the market narrative holds out for a soft landing, we can only deduce that the market is in denial that a recession can be avoided in the very short term but not likely with a timeframe of a year from now. Lithium stocks would run out of time to recover before the onset of the coming recession/stagflation.
So believe what you want but I reckon lithium stocks won't recover and will likely have to endure a more painful bear market ahead.
If my thesis is correct, exiting the lithium space to enter Gold (physical/digital/ETF) would avert a protracted lithium winter to embrace a golden summer (punt intended).
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so lets update now and see how Gold fared against Lithium since 28 April 2024
GOLD Gold +6.85% XGD +2.30%
Lithium PLS -32.10% MIN -54.63% LTR -44.19% LTM -40.13% IGO -25.88% CXO -41.38%
Gold and gold stocks have not exactly gone gangbusters but they delivered positive returns since then (28/4/24) while ASX lithium majors had a disastrous outcome.
See what Denial has cost you in just over 4 months?
Sorry about crowing that I have been right in my assessment but I tried my DARNEST to WARN you!
And I am saying the CARNAGE is not Over yet. I strong believe my X-tree theory will play out to the very end:
PLS - at least $2.10 first stop
LTR - 43c first stop, and could get to the 30s
When you do not want to listen to the MACRO, you will continue to make the big mistake.
My track record speaks for itself- they have been true, except that I've often been Ahead of the Curve before it happens.
