GDX & 20dmf

I hope that with the graphs below, everybody can now be convinced that funds are trading short the miners and long equities and that a pull-back in equities will be bullish for gold miners. But the opposite is also true.

Because it is used by everyone, this pair-trading tactics completely loses its purpose of hedging: both positions will lose when there is a market change. It might be better to be long both or short both the S&P500 and the miners.



Pascal

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