....gold stocks are doing ok but volatile but expectations have been high about outperforming Gold.
....there is a process to this.
....first, as I said before, market participants especially retail are still buying the dip on Mag7 believing this is a great opportunity, so despite Gold's rise, equity market participants aren't looking at gold stocks as much.
...second, Gold's rise is driven by market participants that want the real thing - the real physical Gold and helped by commodity traders. Those guys don't look at gold stocks as proxy for Gold. Not even ETFs. Central bankers one example.
...third, but there has been inflows into Gold ETFs and that has helped both Gold and Gold stocks, but more so on Gold.
...fourth, when equity market experiences a selloff, market participants sell all equities, make no distinction about gold producers standing to benefit from Gold price rise. Some may have to sell their winners to cover margin calls.
...finally, the real time when gold stocks would outperform gold would be when (1) the bear market is in and tech stock enthusiasts have given up interest (2) surviving players look for bright spots to trade and invest and gold stocks become a natural choice plus (3) the Fed would have cut rates substantially and doing QE, a huge catalyst to re-rate gold stocks amidst rising Gold price. Most gold producers would have by then removed their hedges and in a deflation scenario, their AISC would have fallen too making their margins substantially better.
...so in the interim, while equities are in denial on dire state that is forthcoming, both Gold stocks can continue to go higher and lower in volatile fashion but underperform Gold. Gold stocks would be the sector to love once favourite tech stocks have crashed and burnt. Until then, it is unlikely to be a rising Gold price lifting allgold stock boats. Pick the wrong one and you could be down rather than up even as Gold goes higher.
...but in ASX, the gold sector has become the sector of traders (to gamble) as they have been burnt elsewhere in lithium, uranium, and the volatility provides traders with quick gains, though I would think it could be a zero sum game, at some point people will get caught then they hold because they believe in their recovery (since Gold is expected to rise further) - the long in gold could be too stretched or equities get a big selloff.
