Bill,
I'll try to summarize some answers to your questions as to the best of my experience. Trading the XAU for 15 years.
RE:" Do you believe that the relationship of the XAU to POG is more
direct and more predictable than to any one company? What I've
been looking for, I guess, is a barometer"...
Gold stocks are about the most homogeneous group you'll find. Therefore the XAU is a good proxy for the movent of gold stocks. It can be monitored easily in real time. Gold mutual funds for the same reason can be a good proxy and trading vehicle.
RE:"If I check Kitco and
see that POG has gone up a dollar, can I then expect a corresponding
rise in XAU?"....
On a day to day basis, not necessarily. The XAU will try and anticipate movents in gold and often gets overbought or oversold relative to the price of gold. Usually the XAU will lead gold short and intermediate term. Last time I can remember this not happening was 1985. The XAU caught up.
Fact is that when people think gold will move they jump into gold stocks because the leverage is about 3-5 times the same % movement in gold. This is due to the exponental increase in profit margins.
Also, after a gold bear the high cost producers should intiially get the greatest % gain in stock price because they have likely been beaten down the most. Also, large well known gold miners should move first because they simply are well known.
RE:"Would the fact that the
XAU is a basket of stocks smooth out the fact that individual
companies may have their share price affected by many factors other
than POG but a general rise in XAU would be dependent on POG?"
There are always individual cases, major finds, bankruptsies (PGU) etc.. ABX was not in the XAU for many years and propered greatly even in lean POG times. So there is bound to be some smoothing, as with any index. That said, the anticipated direction of the price of gold is by far the greatest influence on the XAU.
RE:"The current bitter strikes that have started to occur in Canada
aren't about people wanting to have money to buy BMW's. Between
taxes and inflation and static salaries a lot of people are being
squeezed financially. A recent report has stated that a significant
number of people are charging their groceries on credit cards and
are unable to clear the balance. At the usurious rates charged by
the credit card companies that makes those groceries very expensive
indeed.
How will this affect POG? "...
I'm not sure it will. Generally higher taxes are disinflationary. Consumers have less to spend and are tighter.
RE:"Is the govt. in collusion with private
business the goal of which is to keep the price of gold down
because then it can be argued there is no inflation since gold is
so symbolic. You might pay twice as much for steak but gold is
at all time lows and you can buy all you want of it so see there
is no inflation."
I doubt the government is in collusion with private business to that end. The government is in business for themselves. Diminising the importance of gold is very important to those countries that rely on printing paper money and expecting that it will be accepted a legal tender. If a currency is backed by gold it limits how much fiat money they can print so they are somewhat dependent on the POG. Most governments a control oriented these days. They don't want Gold to supplant their paper.
Jim |
