'Bearish engulfing' patterns are warning you: Don't buy the dip in gold-miner stocks

Newmont Corporation (NEM) is currently at $112.73, down $14.20 or 11.19%

• Would be lowest close since Jan. 9, 2026, when it closed at $108.99
• On pace for largest percent decrease since Oct. 24, 2024, when it fell 14.7%
• Currently down two consecutive days; down 14.57% over this period
• Worst two day stretch since the two days ending Oct. 25, 2024, when it fell 16.14%
• Down 9.32% this week; worst weekly performance since the week ending Oct. 25, 2024, when it fell 15.97%
• Up 12.9% month-to-date; on pace for best month since Sept. 2025, when it rose 13.32%
• Up 12.9% year-to-date
• Down 14.57% from its all-time closing high of $131.95 on Jan. 28, 2026
• Up 163.88% from 52 weeks ago (Jan. 31, 2025), when it closed at $42.72
• Down 14.57% from its 52-week closing high of $131.95 on Jan. 28, 2026
• Up 167.64% from its 52-week closing low of $42.12 on Feb. 27, 2025
• Traded as low as $112.72; lowest intraday level since Jan. 16, 2026, when it hit $111.28
• Down 11.2% at today's intraday low; largest intraday percent decrease since Oct. 24, 2024, when it fell as much as 15.26%
• Third worst performer in the S&P 500 today

All data as of 1:11:24 PM ET

Source: Dow Jones Market Data, FactSet

By Connor Hart

Shares of mining companies fell Friday, as precious metals retreated from their highs and after President Trump nominated Kevin Warsh to helm the Federal Reserve.

In premarket trading, Newmont's stock fell 5.4%, to $120.13, while Barrick Mining's stock declined 6.3%, to $48.75. Shares of Hecla Mining tumbled 9%, to $23.96, after the company earlier this week guided for lower gold and silver production this year. And shares of Pan American Silver were down 7.5%, to $58.54.

Metal prices, which scaled to record highs earlier this week, began to decline Thursday and accelerated into Friday morning, as Trump said he would nominate Warsh to be the next Fed chairman.

"I have known Kevin for a long period of time, and have no doubt that he will go down as one of the GREAT Fed Chairmen, maybe the best. On top of everything else, he is 'central casting,' and he will never let you down," Trump said in a post on his social-media account.

The U.S. Dollar Index and the 10-year U.S. Treasury yield both climbed higher following Warsh's nomination.

"The Warsh pick should help stabilize the dollar some and reduce (though not eliminate) the asymmetric risk of deep extended dollar weakness by challenging debasement trades--which is also why gold and silver are sharply lower," Evercore ISI's Krishna Guha said in a research note.

Guha added that Warsh has a hawkish reputation and is viewed as independent, meaning "he is better placed to bring the FOMC along with him to deliver at least two and plausibly three cuts this year than some rivals."

Write to Connor Hart at connor.hart@wsj.com

A dramatic pullback late in the day saw the Australian share market give up all of its Friday gains and plunge 0.7% as sudden fears over the future direction of US interest rates took hold.

Gold shares were particularly hard hit by rumours the US President was about to nominate Kevin Warsh as the next US Federal Reserve Chair.

Warsh seen as more hawkish than other choices

A former Fed governor, Warsch was seen visiting the White House after President Trump said he would announce the new Fed chair on Saturday Australian time. Warsch is seen as less likely to introduce a rapid series of interest rate cuts than some of the other candidates for the job, which caused a crunch in the price of gold and plenty of collateral damage to the price of Australian gold shares.

From gains to sharp losses as bullion drops by 5%

During the afternoon crunch which was the biggest fall in nearly two weeks, the ASX 200 dropped 58.4 points, or 0.7%, to 8869.1 points after it had earlier risen to 8971.6 points. Despite the fall, only 4 of the 11 sectors ended lower and the index remained up 1.8% for January and was also up 0.1% for the week. Gold bullion fell as much as 5% on the Warsh speculation, settling at around US$5200 an ounce and the US dollar rose. Silver ended near US$111 an ounce and the Australian dollar slid 0.7% to about US70.05¢.

Materials bear the brunt

Materials was the worst hit sector on the ASX, falling more than 3% as investors dumped gold shares. Some of the worst hit included Ora Banda shares which fell 11.7% to $1.28, while Newmont shares lost 7.9% to $173.53 and Genesis Minerals shares fell 9.9% to $7.59. Even the big miners were hit by the fall with Rio Tinto shares down 3.5% to $151.55, and BHP shares down 1.8% to $50.57.

Defensive earnings sought

Defensive shares had a rare day in the sun with health care outperforming as investors looked for refuge before an expected Reserve Bank of Australia rate rise in the coming week. CSL shares rose 1.1% to $181.42, while sleep device company ResMed shares climbed 3.1% to $37.54 after beating second-quarter earnings forecasts. Energy stocks moved in both directions. Whitehaven Coal shares fell 6.7% to $8.83 as investors took some profits off the table after a 13% rise for the month. Oil and gas companies were still trading well with Woodside Energy shares up 0.8% to $25.37 and Santos shares rose 2.5% to $7.01. Nine Entertainment shares climbed 5.1% to $1.14 as it paid $850 million for digital outdoor advertising group QMS Media and sold its radio arm to the Laundy family. Shares in lithium miner PLS fell 6.5% to $4.29 after reporting a solid December quarter, with higher realised lithium prices driving a 49% jump in revenue to $373 million despite lower production volumes. Shares in Star Entertainment sharply fell by 15.6% to 13.5¢ after it warned of ongoing uncertainties following a pre-tax and interest profit of just $6 million in the December quarter.

The week ahead

There are no prizes for guessing which announcement for the coming week will be the most talked about, with the Reserve Bank now highly likely to increase official cash rates at its first meeting for the year on Tuesday. While the focus will still be on the actual decision – which is now odds-on to be a rise due to firming inflation numbers – there will also be plenty of analysis on whether this will be a one-off rise or the first in a series of rises.

High chance of interest rate rise

Most economists are backing a rise on Tuesday due to underlying inflation pressures becoming more entrenched but the jury is still out on whether the board will opt for a single rise before waiting for later figures or embark on a series of rises to really quench inflationary pressures. Either way, the chances are that after Tuesday official interest rates will rise by 0.25% to 3.85%, causing a cascade effect through home and other loans and also deposit rates. RBA Governor Michele Bullock will also testify before Parliament on Friday. In the UK, the Bank of England (BOE) is expected to hold its benchmark interest rate at the current 3.75%, despite the UK's inflation remaining the highest in the G7. The European Central Bank is also tipped to hold its benchmark rate at 2% on Thursday amid divided opinions about the inflation outlook. Other things to watch overseas include US jobs figures and Chinese manufacturing numbers.

Corporate profit season arrives

Locally there are some other highlights including home values, job advertisements and building approvals but the biggest news will be the arrival of the corporate reporting season. Some of the companies reporting include Credit Corp, Amcor, Centuria Office REIT, Boss Energy, Pinnacle Investment Management, Beach Energy, Garda Property, News Corp and REA Group. The fourth quarter results in the US also continue with some of the reporting companies being Walt Disney, Palantir Technologies, AMD, Amgen, Merck, Mondelez, PayPal, PepsiCo, Pfizer, Take-Two Interactive Software, Alphabet, Eli Lilly, Novo Nordisk, Uber Technologies, ARM Holdings, Ford, Qualcomm, Snap, Amazon.com, Barrick Mining, Bristol-Myers Squibb, and Estée Lauder.

By Jack Hough

There was a king of England called Henry VIII who was tall, fat, moderately tyrannical by 1500's standards, and prone to excess in palaces, clothes, wives, and prestige wars. He inherited great wealth from his father, and seized more from monasteries after breaking with the Catholic church, yet still ended up short on cash. So, he issued more of England's silver coins at familiar face values, while gradually changing the base metal to mostly copper with silver coating.

The tell was Henry's nose, which stuck out the most on coin faces and lost its silver first, earning the king the nickname Old Coppernose. Merchants balked at the new money. Prices soared, and wages didn't keep up. The poor, and England's trade reputation, suffered. More than a decade after Henry's death, a daughter of his, Elizabeth I, became queen and restored confidence with a nationwide recoinage.

Monetary debasement used to be easier to spot. Today, Wall Street uses the term "debasement trade" to describe the startling run-up of gold's price. It was $3,400 a troy ounce when I wrote about its rise in a cover story in April, and close to $4,500 when I wrote here in December about metallurgical whataboutism, which has turned entire swaths of the periodic table of elements into portfolio world-beaters. This past week, gold blew past $5,000 to as much as $5,600. Are we debased yet? If not, how will we tell when we get there? What will it mean for stocks and other assets? And is it too late to buy gold? Let me answer these in order of descending confidence, starting at low.

No, we haven't reached monetary debasement. At this point, we're only playing debasement footsie. Economic terms can mean different things to different people, so let's agree on some definitions. Monetary debasement is the process of reducing the value of money, whereas inflation is a gradual rise in prices, so the two look like sides of the same coin, but they differ greatly in method and degree. Central banks like to run a little inflation — say, 2% a year — because it keeps people spending rather than hoarding, which is good for growth. The fact that bread used to cost a nickel isn't evidence of debasement. Cash isn't designed to hold its value over decades.

Debasement happens when a monetary regime loses credibility — think Zimbabwe in the early 2000s or Argentina over much of the past half-century. It can start with emergency government spending, which turns into chronic baseline deficits, bloating debt. Leaders demand low interest rates and exert control over the central bank. Inflation runs consistently above interest rates. Investors sour on government bonds. The government creates money to cover expenses. Citizens convert their pay into anything but local currency. There might be capital flight restrictions or dual interest rates. Businesses prefer to be paid in outside currencies.

Today in the U.S., only some of these apply. Economic growth has long been artificially juiced by large, chronic deficits. Closing deficits would probably trigger a deep recession, and that's not a vote-getter, so politicians lack the will for it. But the 12-month inflation rate looks only a touch high, notwithstanding the lingering pinch of fast price growth during Covid and some continuing run-ups for individual items, like electricity.

President Donald Trump has called for lower interest rates and badgered and threatened to fire Federal Reserve Chair Jerome Powell, and recently his Justice Department issued Powell a criminal subpoena. That's the debasement footsie part. Powell's term is up in May, and Trump will nominate a successor to be confirmed by the Senate. But if the bond market expects runaway inflation, it isn't yet reflected in Treasury demand, yields, or futures. The dollar has fallen relative to other currencies, but from multidecade highs. It remains dominant in trade.

Gold is usually headed higher. The tricky part is how much and how soon. Deutsche Bank recently calculated that gold has outpaced inflation by 279% over 235 years. That's barely a half point a year, compounded, including the recent run-up. On shorter timelines, gold looks great. It has beaten the U.S. stock market over the past 20 years.

Before gold's recent rally, J.P. Morgan had predicted that a 0.5% shift of foreign central bank holdings from U.S. assets into gold could support $6,000 per troy ounce by 2029. That looks conservative now. This past week, the bank initiated coverage on two gold miners, with an Overweight rating on Barrick Mining, already up 231% over the past year, and a Neutral one on Agnico Eagle Mines, up 140%. With the all-in cost of mining gold somewhere around $1,700 an ounce, free cash flow for both companies is exploding.

Too late to buy gold? I don't know. But if someone asks you at a cocktail party, explain that 68% of the price movement in gold over the past year is explained by U.S. policy shifts, according to a statistical technique used recently by UBS called event-targeted vector autoregressions. If the person asks you to explain how it works, just pretend to trip, then throw yourself into the shrimp tower, yell something about a shellfish allergy, and run.

What does soaring gold mean for the U.S. stock market? UBS says it's going up, I think. Stifel says maybe it stays flat. UBS' case rests on solid earnings growth and expectations for more rate-cutting. It recommends that "underallocated investors add exposure to stocks," but it also sees "value in quality bonds, gold, and capital preservation strategies." Is that bullish? Maybe it's steerish, a steer being a neutered bull.

Stifel argues that after three mighty years for S&P 500 gains, the gold price might cap the index at 7000 this year, not far from where it is now. It points out that the ratio of the S&P level to the gold price has broken down recently like only four other times in history, and that each of those left stocks "range-bound for years." Maybe the debasement trade is more like a burp after a big feast. Either way, I recommend a nap.

Write to Jack Hough at jack.hough@barrons.com. Follow him on X and subscribe to his Barron's Streetwise podcast.

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