The only thing gold miners and biotech stocks have in common is their extreme performance over the past few years. While miners lost 76% of their value between 2011 and 2015, biotechs gained 241%.
Below you’ll see the 31-week rate of change of gold miners versus biotechs, which has spent most of the last few years deeply in the red. However, this ratio has jumped through the stratosphere, rocketing 144% in just the last 31 weeks.
Now investors’ extreme feelings about these two areas of the market have been obvious for some time. And in that time, there have been many people who “saw” this coming. However, it’s likely that their attempt to profit from their Nostradamus-like vision fell short. There is a graveyard full of people who were betting against biotechs and attempting to catch the falling knife that was gold miners. There is a huge difference between calling it versus nailing it.