When gold miners and gun-toters lag the broader economy, it's usually a good sign that conditions are on the mend. Both sectors outperform when times were tough, but this year, their growth has slowed relative to the market has a whole.
The S&P 500 index has gained 57% since March 9, 2009, according to a USA Today report, while Barrick Gold (NYSE: ABX) and Newmont Mining (NYSE: NEM) are up 36% and 21%, respectively, for the same period. Smith & Wesson (NASDAQ: SWHC) is up 30%. Again, these are definitely respectable results, but they aren't keeping pace with the index.
Guns and gold may be a measure of concern, since people are drawn to both when anxiety is at its highest. Now that stocks for these sectors have slowed down a bit, it may mean that people aren't as worried as they were last year and in early 2009.
The prospect of tougher gun control laws and fears that a difficult economy would lead to an increase in crime led handgun sales to surge. Gun backlogs hit levels seven times higher than the norm. Monthly background checks for gun permits and purchases have been up every month this year compared to the same months last year. But, the tide is starting to turn. Smith & Wesson's backlog fell from $267 million to $177 million from the first quarter to the second, this year.
Gold mining stocks continue to be pushed higher by gold prices of over $1,000 an ounce, but the shine is starting to fade. Of course, if we don't see sufficient progress on the recovery over the next few months, gold and guns may stage a comeback.
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