As everyone knows, metals have gone berserk lately. As I’m typing this, my frenemy palladium is up over $200 per ounce (!!!!!!) which is over 11% just in the first 45 minutes of trading. Precious metals mining ETFs like GDX, GDXJ, and SIL (below) are raging higher as well.
If you think miners are overextended, instead of daring to grab the skillet handle of the aforementioned ETFs, you might consider XME, which is a more general mining ETF. Importantly, the long-term XME/GDX ratio suggests that XME will badly underperform gold miners for months, if not years, to come.
I’m taking a stab at this by shorting XME just now, but with a tight stop at 109, just above today’s high.
If precious keeps freaking out, this may be a dud, but – – we shall soon see!
