by David Kranzler
Investment Research Dynamics
“Gold, unlike all other commodities, is a currency…and the major thrust in the demand for gold is not for jewelry. It’s not for anything other than an escape from what is perceived to be a fiat money system, paper money, that seems to be deteriorating.” – Alan Greenspan, ex-US Federal Reserve Chairman, August 23, 2011
2020 was an interesting year, to say the least. One aspect of the markets that is not mentioned in the mainstream media is that gold turned in its best year since 2010. Skepticism with regard to the durability of the rally in gold and silver imposed restraint on the mining stocks, as the stock segment of the 2020 precious metals rally lagged the returns on gold and silver.
There are two ways to interpret the relative performance of the mining stocks vs gold/silver. One interpretation is that, because they underperformed, the stocks are signaling at some point the entire sector will decline in 2021.