Direxion Daily Gold Miners Be (DUST)

[Sgreg]

During the great depression yes they did. During the great recession they did bad though. Look at mining stocks between March 2008 and October 2008. They crashed. They recovered once the bailout went through. Before that the last bear cycle was the 2000 tech bubble and again mining companies didn't do very well.

Basically the question ends up being will there be deflation or not. Mining companies are highly leveraged and so they depend on banks. During deflation banks have troubles and anything that banks service like mining companies also struggle, just the way it is.

I believe we are already in a bear cycle. If deflation doesn't hit and/or the financial system does not get threatened then mining stocks will do good. If there is deflation and/or financial system troubles then miners will perform poorly. One has to decide which flavor of bear market we are in. Basically how severe of one. Gold/silver don't have the baggage that mining companies have. They are just metals. They don't have debts and balance sheets and loans etc etc.

The great depression was the exception but other then that basically if there is a mild to moderate bear cycle then miners do fine. If there is a severe bear cycle then miners do bad and it is because they depend on banks to service them and if banks are in trouble then anything serviced by them is effected.

What flavor bear market are we in? How severe? I don't yet know but I know we are in a bear market. S&P chart over the last year shows it with lower highs and lower lows over the past year.