The recent selloff days on HGG certainly seem exaggerated. But...

The recent selloff days on HGG certainly seem exaggerated.

But running a chart comp against BTT (BT funds mgt), PTM (platinum Asset Mgt) and IEU (Euro shares etf) it looks like there is strong correlation recently between BTT and HGG - which have both considerably outperformed PTM and the etf.

At 18x PE, HGG is currently priced cheaper then BT or PTM.

But its up 50% this year - so i;d say, given the similarity in selling recently in it and BT - they are probably both being seeen as a good area to take profits, given there's a lot of talk about markets needing a correction etc sometime in the next 12 months.

But with HGG the thing to watch is Mario Draghi's June ECB rate cut.

If wholesale European interest rate go negative it will force banks to release funds into the commercial market - and European stock values will have another leg higher, which will in turn lift HGG earnings.

The rate cut is seen as 99% certain.

So i think its a good time to buy HGG on this weakness.

The sellers are looking at a macro risk of a big sell off triggered by the US stock market - which is bracing for rates to rise sometime in 2015.

I think thats legitimate but that the sell off wont occur til after the Aug/Sep earnings season momentum has run out.

So i;d buy HGG now for a pop in June and probable general market rally over the following couple of months.

DYOR