Thursday, September 15, 2011

Industry Experts on Gold Mining Shares

Just a couple of links to share this morning, both James Turk and Eric Sprott have recent shared their views on the undervalued Gold stock sector.

This from James Turk, back on September 5th:
Mining stocks – On the runway, ready for take-off

Gold has been rising faster than the price of mining stocks.  Here are some statistics to prove this point.

In the twelve months ending August 31st, gold has risen 46.5%, but the XAU Index of precious metal mining stocks climbed only 17.7%.  By itself, that is a good rate of return for mining stocks, but not what one would expect given gold’s appreciation over this period.

The current year-to-date results are even more telling.  Gold has risen 28.7% this year, compared to a -3.8% loss in the XAU Index.

In the last two months, gold has risen 21.7%, while the XAU Index climbed 8.4%.  You might notice from these results that the XAU Index is finally starting to show some relative strength compared to its year-to-date results, which is one sign that things may be turning in favor of the mining stocks.

This one from Eric Sprott and David Baker earlier today:
Gold Stocks: Ready, Set, …

Last week, the HUI Gold Index marked a new all-time high as it surpassed 600. Recent gold equity investors were undoubtedly happy with this move, but for longer-term holders, the recent strength is actually somewhat disappointing. If you review the chart below, you’ll notice that while the gold price has almost doubled since early 2008, the HUI Index has appreciated by a mere 22% over the same period (see Chart A). If the HUI was justified at 500 in early ’08, it should surely be justified at 1,000 today, given the appreciation of the gold price over that time. So why have the equities lagged?


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  1. RE:2008. While gold corrected around 30% in USD, it actually rose significantly in AUD terms. what would this would mean for AUD gold stocks and what did AUD gold stocks do during 2008, struggling to find a chart...

    Good stuff as always

  2. euphoria, if you check the first chart in this post:

    You will note that our Gold stocks followed their US counterparts lower regardless of the local price of Gold. I expect them to continue this trend (following global Gold mining shares rather than forming their own trend).