April 13, 2021
Gold had one of its biggest runs last August, but gold funds and ETFs have been the real victors. VanEck Vectors Gold Miners is up 50% over the past year which is 1.5x the gain in Gold itself, and smaller miners have been gaining traction with Canadian Amex Exploration up 128% and Starr Peak Mining up 300% over the past 12 months. As the Biden administration looks immediately to another trillion-dollar stimulus infrastructure package after just passing the first one, many are worried about the ‘Cobra effect’, a phrase coined by Lawrence McDonald. Where stimulus will be short-lived and people will be short-changed with hyperinflation. Junior minors such as Amex and Starr Peak are capitalizing on new territory and are in a position to benefit from macro factors the most.
FINSUM + Magnifi: The cobra effect is too dire a projection for us, but a little stagflation (lower growth and higher inflation) is a potential possibility and growing debt makes that scenario increasingly more likely. Gold’s best performance usually occurs during stagflation.
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