Gold Stocks

purch

This may bring cheer to all you holders of BlackRock Gold & General, World Mining Trust, Investec Gold et all who have been watching these funds lag the physical market.

According to John Hussman Phd. founder of Hussman Funds (blokes a genius in my book).......

http://www.hussmanfunds.com/html/gold.htm

When the Gold/XAU ratio has been greater than 5.0 and the ISM Purchasing Managers Index has been less than 50 (indicating a contracting U.S. manufacturing sector), gold shares have appreciated at an average annualized rate of 125.6%. In contrast, when the Gold/XAU ratio has been less than 3.0 and the Purchasing Managers Index has been greater than 50, precious metals shares have plunged at an average annualized rate of -49.9% The previous all-time high for the Gold/XAU ratio since its start in 1984 was about 6.35 in the summer of 2001.

It is now over 7 and the PMI is at 43.5, so Hussman's study would suggest it is an excellent time to buy miner shares aggressively

Personally I think the ratio being at an all time high should be looked at with a little more caution. There are unusal moves occuring in these markets which need careful analysis

:eek:

On a slightly different tack.....


Looking at the outstanding Tonnages in the SLV

Feb 08 - 5364.99
Mar 08 - 5578.95
Apr 08 - 5776.51
May 08 - 5989.57
June 08 - 6002.41
July 08 - 6276.86
Aug 08 - 6474.04
Sept 08 - 6852.24



During this time the price of Physical Silver has fallen roughly by a half, from $21 to $11......GLD too is at peak tonnage again, after a period of selling


Interesting ??

purch

Well I thought it was interesting..........

Hyrggur to trufla the Island Banki board with my rambling !!!!

wombat42_2

purch wrote: »

Well I thought it was interesting..........

Hyrggur to trufla the Island Banki board with my rambling !!!!

Well I have a large slug of Blackrock Gold and General so I hope you are right :eek:

I,_Brian

Honestly can't agree - mining and oil stocks are getting tanked at present because a declining world economy hasn't the requirement for current volumes of raw materials, so you end up with over supply, which leads to slowed production, which leads to lower revenues.

I've been watching the gold chart here for the past few weeks expecting a huge spike:
http://www.metalmarkets.org.uk/

However, while there has been some activity, despite some of the worst ever weeks for equities, gold remains down since July.

I think you'll find many people are simply hoarding cash, and they'll only invest when market conditions show signs of improvement - in which case, it'll be a rush to buy equities on the cheap rather than "safe" gold.

Gold has already peaked IMO, and there's no big demand for supply.

2c.

dunstonh

It got lost in the deluge of duplicate icelandic posts.

wombat42_2

I,_Brian wrote: »

Honestly can't agree - mining and oil stocks are getting tanked at present because a declining world economy hasn't the requirement for current volumes of raw materials, so you end up with over supply, which leads to slowed production, which leads to lower revenues.

I've been watching the gold chart here for the past few weeks expecting a huge spike:
http://www.metalmarkets.org.uk/

However, while there has been some activity, despite some of the worst ever weeks for equities, gold remains down since July.

I think you'll find many people are simply hoarding cash, and they'll only invest when market conditions show signs of improvement - in which case, it'll be a rush to buy equities on the cheap rather than "safe" gold.

Gold has already peaked IMO, and there's no big demand for supply.

2c.

Tosh. Ever heard of China and the comodity supercycle ?

One interesting point is that if producers are starved of money to invest because of the credit crunch, that will lead to Supply Destruction. As Jim Rogers frequently says, Commodities dropped sharply 3 times during the last 10 years and each time they rocketted quickly afterwards, I suspect because of Supply Destruction.

Gold has to be at least about $800 to make it worthwhile for Gold Producers to do any mining at all.

cheerfulcat

purch wrote: »

Well I thought it was interesting..........

Hyrggur to trufla the Island Banki board with my rambling !!!!

It is interesting - as dunstonh says, it got lost in the flurry. FWIW I think that a lot of the sell-off in mining and oil related shares recently is forced by circumstance.

PS thanks for an investment related post...

mr_fishbulb

purch wrote: »

During this time the price of Physical Silver has fallen roughly by a half, from $21 to $11......

Tell me about it. Anyone know why?

Was thinking becuase Silver is used as an industrial metal too and the demand has dropped. But Gold has dropped only slightly in the same period.

wombat42_2

cheerfulcat wrote: »

It is interesting - as dunstonh says, it got lost in the flurry. FWIW I think that a lot of the sell-off in mining and oil related shares recently is forced by circumstance.

Yes leading to Supply Destruction which should in turn trigger higher commodity prices.

Also recently the US dollar has been rising which isnt good for commodities - but in the long run the US dollar may fall.

wombat42_2

mr_fishbulb wrote: »

Tell me about it. Anyone know why?

Was thinking becuase Silver is used as an industrial metal too and the demand has dropped. But Gold has dropped only slightly in the same period.

Gold is half currency half commodity so it doesnt follow the general commodity trend. Gold isnt generally used for anything like silver etc. Silver always has bigger swings than gold.

wombat42_2

Bump Bump Bunp