The dollar dropped an average of roughly 1 percent against the Pound and the Euro. The Dow rallied 208 points (1.99 percent), and the FTSE was up 2.65 percent. What’s going on with gold? Despite an early surge on the New York NYMEX, the yellow metal spot price and corresponding stocks couldn’t keep pace with other equities. Here’s a handful of the most obvious underperformers in gold stocks:
- Hecla Mining Company (NYSE:HL), +1.01 percent
- Coeur d’Alene Mines Corporation (NYSE:CDE), +0.46 percent
- Richmont Mines Inc. (AMEX:RIC), +2.12 percent
- DRDGOLD Ltd. (NASDAQ:DROOY), +1.21 percent
- Allied Nevada Gold Corp. (AMEX:ANV), +0.75 percent
The best performers were the international majors who are more tied to basic materials. Among them:
- Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX), +4.56 percent
- Rio Tinto (NYSE:RTP), +5.26 percent
It appears better-than-expected earnings have created a micro-bubble, that could present some excellent short opportunities – particularly in the technology and basic materials stocks. In two weeks, earnings will taper off, and I expect reality to start setting in.
The ECRI, for instance, is pointing to a recession. Alan Greenspan’s calling for a double dip, and I’m try to free up capital and move into dividend stocks after my shorts blew up in my face today. I want to short at the top, and I think we’ll have that opportunity in the next two weeks – no matter what sector you’re in.