Why Short A Miner?

NEM 10.30.09A buddy of mine said “They’re a gold miner!  How can you short a gold miner in a down market!  Gold’s going to skyrocket on fear.”  I can certainly understand his point of view a few months ago however in my mind, things have changed.  We’re no longer in fear of skyrocketing inflation; at least not yet.  That inflation trade of *going into gold* is off the table; for now.  Secondly, a flight into gold as a fear trade does not necessarily translate into the companies that dig it up.   The raw material could appreciate, but in an extended market with companies having rallied up to 60% and during a market correction, miners can feel the pinch as much as any other while investors flee to less risky assets such as Bonds.   Lastly, I’m a chartist.  I look at this chart with accumulation obviously dropping and sure, I’m looking for some downside here; not a *buy the dip* stock at this point in time [imho].

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s