FX.co ★ Mining sector is still relatively cheap

Jesse Felder, the creator of the Felder Report and a former Bear Stearns analyst, said in his most recent market review that widespread pessimism in the precious metals market has made the mining sector relatively cheap again.

The same thing happened to Felder in 2018, when he began recommending investors to look at stocks: Facebook (Nasdaq: FB), Amazon (Nasdaq: AMZN), Netflix (Nasdaq: NFLX, Google (Nasdaq: GOOGL).

Since his initial recommendations in May 2018 VanEck Gold Miners ETF (NYSEArca: GDX), which represents gold producers, increased by 44%, peaking in July 2020, up nearly 90%.

At present, Felder said he sees the same conditions as three years ago. Despite record margins, higher cash flow, and better balance sheets, there is little interest in the mining sector as gold prices remain in consolidation.

Jesse said that he is optimistic about the shares of gold mining companies because he believes that gold prices will eventually increase.

In May, Felder noted that gold was undervalued as investors ignored the growing threat of inflation.

According to analysts, gold is facing serious problems as the Federal Reserve prepares to tighten its monetary policy, starting with a reduction in monthly bond purchases from November.

These expectations of tightening monetary policy have led to the fact that the US dollar has approached an annual high.

At the same time, the yield on 10-year US bonds has more than doubled from last year and is currently around 1.68%.