Precious metals still have something to prove: strategist

Chris Vermeulen, CEO and chief market strategist at The Technical Traders, remains skeptical about investing in precious metals despite a recent rally. Vermeulen, speaking to MINING.COM anchor Devan Murugan on Top of Mine, acknowledged a strong increase in gold, silver, and mining stocks but pointed to chart patterns indicating a potential downtrend.

He attributed the recent surge in mining stocks to herd behavior rather than a lasting shift in the market. Vermeulen expressed caution, stating that he doesn't fully trust the current market move. This perspective highlights the contrast between the bullish fundamental case for precious metals and the technical indicators he sees.

For Vermeulen, the opportunity cost of holding an asset that may remain stagnant outweighs the appeal of waiting for the fundamentals to translate into stronger price momentum. He stressed the importance of capital deployment in generating returns, noting that precious metals could remain dormant for several years, potentially missing out on significant gains elsewhere.

Vermeulen's approach emphasizes tuning into market frequencies to understand and play the market, whether bullish, positive, or negative. He pointed to fear in the bond market and heightened attention on yields as factors that are reviving interest in precious metals, as investors seek alternatives to the dollar. Vermeulen concluded, acknowledging that "something eventually will break," but highlighted the potential for fear and a search for safety to drive continued interest in the precious metals space.