Hello, Subscribers!
Astute readers — which, by definition includes all Haymaker readers — likely recall, with a little prompting, Kevin Muir’s note we ran last spring on the auto stocks. His advice then was dead on the mark: sell them! In fact, he went so far as to tell his followers to take them off their watch screens.
Since then, most have been pounded, some like a chicken breast at a high-end Italian restaurant for that night’s piccata dish. (Stellantis has been one of the prime recipients of the beatings).
For sure, there have been some exceptions like China’s juggernaut hybrid automaker, BYD. Oddly, GM has been another car stock that avoided the quicksand. Yet, overall, this was excellent advice.
Kevin’s latest missive is highly relevant to most of the Dailies we’ve run this week. As you are aware, those have been primarily focused on gold and the gold miners. His cut-to-the-chase advice is: buy the miners.
One of his key points is how poorly the miners have performed over the long run versus bullion itself, a message this newsletter has often conveyed. However, he’s also correctly noting that there is a major change underway.
Though he doesn’t cite this aspect, the eye-catching breakouts to 12-year highs both the senior miner ETF (GDX) and the junior miner (GDXJ) have recently produced are, in and of themselves, reasons for you to be considering these for accumulation. This is notwithstanding that for those of us who bought them much lower, doing some trimming is understandable. As Kevin concedes, should the overall market crack again, they are unlikely to be immune to the weakness (though they certainly have been thus far this year).
Most of us who are long-term gold bulls are likely still quite overweight this group. That’s admittedly not hard to do when the only miner in the S&P 500 is Newmont and it represents a nanoscopic 0.14% of America’s main equity index. Consequently, having, say, 5% of your portfolio in the gold miners entails considerable “benchmark risk”; i.e., the risk of lagging should the miners do their usual faceplant. Of course, the flip side is true when they come alive, as they did in 2020 and this year. As you will read, Kevin believes the recent rally is in its early innings. Again, this is precisely what their stock charts are telling us.
This week, they have pulled back, mitigating the overbought condition they were in, as both GDX and GDXJ have come in a quick 10% or so. They could certainly retreat further yet, but sometime soon, they may be worth nibbling on for the majority of you who have little to no exposure. (My bet is that, in most cases, it’s “no” versus “little”.) Should their correction approach 20%, a heftier commitment might make sense.
Kevin is also opining that the miners are likely to report blowout earnings increases for the first quarter. Many of them are also generating abundant free cash flow that might soon be describable as obscene.
In other words, we may be entering a phase where their former X-rated performance might be an artifact of the past. Frankly, for some of the top-tier players, like Agnico Eagle (AEM) and Alamos Gold (AGI), that is already fait accompli. For those with less adept management teams, it remains a show-me situation, but one that should soon be a case of not just “Show me the money”, but “Show me a whole lot of money!”
David “The Haymaker” Hay
GOLD MINERS: THE 'TOURIST IS BUYING
Why they will likely beat the S&P 500 and maybe even gold itself!
Kevin Muir (originally published, April 24th, 2025) — Abridged version follows
You folks know where I’ve stood on gold for the past few years. I’ve repeatedly counseled investors to abandon the US dollar and real-interest-rate regression analysis and instead focus on one thing — the People’s Bank of China. When the West confiscated Russia’s foreign exchange reserves, it forever changed the equation. Gold stopped being correlated