Gold Mining and the Wuhan Willies

The coronavirus pandemic is a dream come true for people trading on the success of gold miners and here are a few key reasons why:

1. They are making a killing

The cost of pulling these rocks out of the ground stays roughly the same regardless of whether business is boom or bust. That means that profit is through the roof right now as the price of gold is high. Even if the price of gold does not keep going up, if it bounces around at this range or even a little lower, these gold mining companies are still going to continue making money hand-over-fist.

2. Low interest rates drive the price of gold up

Regardless of what you think about hoarding yellow bricks, gold is still a safe haven for boomers, especially when their other safe havens are sucking. When their CDs and annuities are paying jack shit, you can't keep them away from it. We know the Fed is going to keep interest rates at zero for the foreseeable future and it is entirely likely that we will see rates go negative. Low rates are great but negative rates would be rocket fuel.

3. It doesn't matter that much what SPY is doing

A lot of people are getting eaten alive right now trying to figure out whether the S&P 500 is going to go up or down this week. When the conditions are right like they are now, gold miners are going to be making bank regardless of what the S&P 500 is doing.

Positions: GDX 5/15/20 29 C GDX 5/29/20 31 C