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Quick Note on the PM Stocks
It is very important to remember the divergence that is taking place within the stocks. As I’ve noted several times, the smaller stocks are strongly outperforming the larger stocks. Thus, investors have to look beyond indices like the XAU and the HUI and follow a larger basket of smaller stocks. We will continue to track the indices because they are important, but nonetheless, keep in mind that there are stocks out there like AUY, GRS, PAAS, SSRI and SLW, that are outperforming and leading, but they have little impact on the XAU and HUI. Thus, do not get off track if you hear professionals talk about the weak gold market. That is false. What we are seeing is sector rotation. As a bull market matures, investors go for smaller and riskier stocks. However, as we have noted, the smaller stocks in this sector, actually have strong fundamentals and aside from the liquidity factor, are less risky than the bigger ones.
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