FYI For those who do not follow the sector: My broker, IB, has a news system integrated into the software.
I can't remember, that ever before there has been such a concentrated flood of negative articles about PMs and miners and pro shorting-miners for the last two weeks. It's incredible. Also the amount of selling calls seems to me extraordinary.
Interestingly this coincided with the wave of downgrades from banks for miners. And this downgrading also continued today.
As a contrarian type of speculator, i find this very interesting.
Miners are fundamentally very low valued compared to the precious product they produce. Can they go lower? Sure. But the chance/risk-ratio going long now IMO is excellent in the medium to long perspective. And what does happen in such a depresed market? Do teh banks recommend to buy low? No! They recommend to go short what is already down. They recommend to avoid miners and go into normal equities, that will probably have problems in the next quarters to keep the earnings at these levels.
This reminds me very much about the year 2007, where you were a complete "idiot", if you warned of a bubble in equities. And today?
Central banks are printing like never before in history, at key days and key technical levels they hit the PMs hard and the mass is running where they want them to go. 90% mass psychology.
Nobody knows when a market becomes rationale, but from time to time the irrational exuberance is corrected. And therefore i believe the undervaluation of mining stocks will be corrected.
I also believe, that the irrational view, that ETFs were a source of physical, will also become corrected. People just don't take warning signs not serious as long as it is hitting others only: LIBOR manipulation? Teh chief of NASDQ running a decade long a ponzi scheme? GS convicted for naked short selling? Stolen segregated customer accounts? Physical gold listed as gold and gold receivables from central banks? Intervention in the currency market? Buying 90-100% of new issued national debt? Hypothecation and rehypothecation? ETFs that do not guarantee physical delivery?
Nothing to worry about! Only conspiracy nuts are worried!
I also find it interesting, how fast people are forgetting: Has the global financial system been in danger? How often? Three times since 2007 a global financial meltdown almost happened according to highest ranking officials in the IMF and finance ministers.
Therefore I believe, a revaluation of paper assets and real assets will occur one day. Not tomorrow and not in one month. But one day ETFs will become revalued and so will mining shares with real deposits...