Last time JP Morgan said buy, there was a sell-off. I would assume this is bullish for gold then SMF

JP Morgan is telling investors mired in money-losing gold positions not to be a buyer.

What follows is an excerpt from Canaccord Wealth Management’s Morning Coffee newsletter.

With gold stocks starting to behave more and more like solar stocks, investors’ patience for the yellow metal is waning to say the least. To investors still mired in money-losing gold positions, the next question is: what to do now?

According to JP Morgan Chase (NYSE: JPM, Stock Forum), the answer to that question is “don’t be a buyer.” For starters, the analyst notes that while gold prices are likely to stay within a range, the cost of mining will continue to rise. That means miners, which begin reporting earnings at the end of the month, will continue to show declining profit margins, even as they try to rein in costs.

The analyst wrote: “All the miners are working on cost control, but it will probably take some time to reign in cost. Hence the upcoming reporting season could have been a catalyst that encouraged some of the selling seen in the market. The second quarter also tends to be a weak one for precious metals, he says.

That, combined with dollar strength, could limit any upside for the stocks. The analyst also commented: “The second quarter is typically a lackluster one for precious metals as demand from the world’s largest market for physical metal in India slows. We do hope that the normal seasonal strength that we expect in Q3 is not capped this year by dollar strength.”

Add to that the disappearance of the institutional investor within the gold space and the average Canadian retail investor who is smarting from too much commodity exposure in their accounts, and the question remains “who’s left to buy gold shares?”