by David Kranzler
Investment Research Dynamics
The monetary “gods” at the Federal Reserve have created the perfect monetary policy recipe to fuel gold, silver and mining stocks to new all-time highs and beyond. While the bubbleheads in the financial media have been garishly cheerleading the general stock market as it heads to an extreme overvaluation that will not end well, the mining stocks have outperformed the big three stock indices by a considerable margin. As an example, since the March bottom, GDX is up over 100%, while the Nasdaq Composite is up 51.6% and the SPX is up 40%. And the mining stocks are just getting warmed up.
Relative to the prices of gold and silver, the mining stocks are still extraordinarily undervalued. In 2011 when gold peaked at $1900, the HUI index was trading over 600. It just recently crossed over 300.