On Friday July 26, 2002, the film Austin Powers In Goldmember was released in theaters. While I can’t recall whether it won any Academy Awards, it did do pretty well at the box office, hauling in almost $300 million. The following Monday, July 29, the PHLX Gold/Silver Index, best known by its ticker, XAU, hit a low of 55.90. That was the last time the index traded below 58…before today.
While the anti-gold crowd has certainly had the upper hand the last few years, I’m not sure even the most ardent of haters would have predicted that gold stocks would have been taken to the woodshed this badly. Of particular note, the XAU is now even below its lows of 2009.
Considering the price of gold is still well above its levels of 13 years ago, not to mention its 2008 lows, it would seem that the gold stock beatdown has gotten ahead of itself. However, that is a subjective statement. The best lesson is that “price is truth”. Cheap can always get cheaper, in other words, so trying to play hero by buying something because it is “down a lot” is a dangerous game.
For the gold bugs out there, perhaps this chart will mark the bottom for you. After we tweeted it this morning, the XAU did put in a furious rally. However, I am unaware of any existing “Goldmember Indicator”. I will say that the launch of the film in 2002 was uncanny in its timing. Neither gold nor gold stocks would challenge those 2002 levels again as they continued their emerging secular rallies for nearly another decade before running out of steam. So whether the producers were on to something regarding the precious metal, I don’t know. But if I were a gold bug, I would certainly be on the lookout for a sequal.
More from Dana Lyons, JLFMI and My401kPro.
The commentary included in this blog is provided for informational purposes only. It does not constitute a recommendation to invest in any specific investment product or service. Proper due diligence should be performed before investing in any investment vehicle. There is a risk of loss involved in all investments.