Phil > Some people take this as proof that gold price reacts to the stock market (xau), not the other way around
In my opinion, and as we have discussed, the USD is the most important driver of the present market in gold and gold shares.
Sometimes gold shares run ahead of the gold price and sometimes the gold price runs ahead. Usually, as far as mining shares are concerned, however, because a rising gold price makes increasingly more lower grade ore payable, the gold mining shares accelerate like crazy, especially those of the marginal mines.
But, as I keep saying, this "bull" market is quite different from anything I have seen in the past 40 years. Why? Firstly, it's predominately driven by the buying of futures and, secondly, demand for actual gold has been pedestrian. And, of course, it is the demand for actual gold and its price which determines the profitability of the gold mines (all other factors being equal). Thus I feel it's the unimpressive demand for gold bullion which has had this depressing effect on the gold share prices. But that's only my opinion.
Meanwhile, if you look at the prices of the major gold mining shares you will see that they are topping out within a price range. And another feature is that there wasn't much speculative "fizz" in most of them for quite some time (I'm talking about the shares in the XAU and HUI, not Canadian juniors). This chart of the HUI demonstrates what I'm talking about
stockcharts.com[l,a]dallyiay[df][pd150,2][vc60][ilb14!la12,26,9]
Goldfields is an even better example but, of course, being a SAn company the factors governing its price are different from those in the US.
stockcharts.com[l,a]dallyiay[df][pd150,2][vc60][ilb14!la12,26,9] |
