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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: dalroi who wrote (89819)	5/6/2012 11:28:41 AM
From: bart13	Read Replies (3) \| Respond to of 220477

I did a pretty long piece a few years ago with charts on physical vs. stocks that may help - and I do agree with you. Junior miner performance Per the Financial Sense Junior Indexes 2006 review ( 2007 results here), there are 4 main classifications of junior miners - Overall, Producers, Development and Exploration. Based on the relationships since 2002, the juniors have outperformed the BGMI by about 3-3.5 times and the HUI by about 2-2.5 times (see 2002-6 data below to see how those multipliers are derived). Transferring that performance back to the BGMI's 1970's bull market data and using the January 1980 high as the high point (the Dow/gold ratio high) and January 1970 as the start, and using London prices: Physical gold went from $36.02 to $850.00, a gain of 2,260%. Physical silver went from $1.84 to $48.00, a gain of 2,509%. The BGMI (the best long term representation we have of all gold & metals mining stocks) went from 92.34 to 716.66, a gain of 676%. Juniors miners gained an average 3.25x the BGMI, or 2,197%. A 50/50 split of physical silver and gold returned 2,385%. David Galland of Casey Research notes during the “last major inflationary period in the US, 1962 to 1982, gold shares rose, on average, 1,503%. This correlates well with the data above. Using the January 1980 high as the high point (the Dow/gold ratio high) and January 1966 as the start (the Dow/gold ratio low), and using London prices: Physical gold went from $35.13 to $850.00, a gain of 2,319%. Physical silver went from $1.29 to $48.00, a gain of 3,621%. The BGMI (the best long term representation we have of all gold & metals mining stocks) went from 98.64 to 716.66, a gain of 627% (note that the BGMI's later actual peak in Oct 1980 was about 1285). Juniors miners gained an average 3.25x the BGMI, or 2,262%. The Dow went from about 985 to about 870 during the period, for a loss of about 12%. The S&P 500 went from about 93 to about 110 during the period, for a gain of about 18%. The dollar index went from about 1.205 in 1971 (when dollar index records started being kept) to about .85 in January 1980. In other words, in both scenarios physical gold and silver returned significantly better results than stocks - including juniors. For another parallel - using the partial bull market high in late 1974 as the high point and January 1966 as the start (the Dow/gold ratio low), and using London prices: Physical gold went from $35.13 to $183.72, a gain of 423%. Physical silver went from $1.29 to $5.01, a gain of 288%. The BGMI (the best long term representation we have of all gold & metals mining stocks) went from 98.64 to 458.79, a gain of 395%. Juniors miners gained an average 3.25x the BGMI, or 1284%. These relationships bear a very high similarity to the bull market since 2000-2, with the exception that gold was price controlled before 1966-1971 and had more catch up to do than silver. nowandfutures.com