Thursday, December 10, 2009
Gold Stocks Perspective
More perspective on Gold stocks. While Gold sits at new all-time highs when priced in U.S. Dollars, major Gold stock indices haven't made significant new highs yet. In fact, most Gold stock indices have displayed an unusual calm since the spring. Nowhere is this more apparent in the Gold stock indices I follow than in the S&P Toronto Global Gold Index ($SPTGD). No sane individual would call this chart parabolic or overbought and, in fact, it is calmly and quietly quite bullish. Here's an 18 month daily linear chart of this index thru today's close:
For some even greater perspective on where we are, here's a 10 year weekly log scale bar chart of the $SPTGD index:
This isn't great news for Gold stock investors that are looking behind them at the past, as the Gold price certainly has not been consolidating for 4 years! Some would argue that this is bearish for the price of Gold and suggests the move in Gold is probably over. Others, like me, see a wildly bullish potential for Gold mining stocks and continue to buy on weakness. We shouldn't have to wait much more than a month to find out if a new bull move is upon us. This ratio chart of the $SPTGD divided by the U.S. Dollar price of Gold shows how this index has underperformed the price of the metal over this secular bull market in Gold that is far from over (10 year weekly chart of $SPTGD:$GOLD follows):
I see Gold stocks as an opportunity here - a big one. I am not talking about juniors that have gone up by 1000% over the last year, though some of these stocks will continue going higher in spectacular fashion. I am talking about your average, run of the mill Gold stock that hasn't even made new all time highs with the price of Gold yet. I remain patient and rabidly bullish on the Gold patch.