The leverage between gold stocks and gold remains very low
Dan Oliver, founder and President of Myrmikan Capital joins us for a special editorial today to look at the leverage between gold and gold stocks. We pull up the 20 year HUI:Gold chart (below) and note that even with the +120% move this year we are still at the near bottom of the range.
We also discuss the factors that Dan sees driving the actual gold price in the future. Here’s a hint… it has a lot to do with debt around the world.
Click download link to listen on this device: Download Show
It appear to me Japan was pumping money again into the system last night.
It must be their turn.
Those darned rules in Europe seem to be a problem and are impeding pumping money in to support Italy’s banking system. That could be where the first black swan takes off from.
The European Union on Tuesday launched dispute proceedings against China in the World Trade Organization.
After similar action against China by the U.S. last week, the EU announced the move alleging China’s measures violate WTO rules, distort the market and unfairly favor Chinese companies.
“We cannot sit on our hands seeing our producers and consumers being hit by unfair trading practices,” said EU Trade Commissioner Cecilia Malmstrom.
The EU said China imposes duties and quotas on 11 materials it exports to the EU. They include graphite, cobalt, chromium, magnesia, antimony and indium, among 20 raw materials considered “critical to Europe’s economy.”
The move sets off a 60-day period where the two sides can hold consultations and try to resolve the issue, after which the EU can seek an external ruling if no deal is reached.
The EU filings noted China controls two-thirds of the world supply of graphite, which is used for lubricants and in steelmaking; it’s the world’s top producer of cobalt, which is used in rechargeable batteries, thanks to deals with third countries; it produces 78 percent of antimony, which can be used for flame-retardants for plastics and aircraft; China produces half of the world’s refined indium, which can be used in flat screens.
Good chart. After reading Stewart Thompson’s article on 321Gold this morning and seeing the chart of XAU/Gold (http://www.graceland-updates.com/images/stories/16jul/2016jul19xau1.png) I wondered to myself how much the HUI/Gold ratio would resemble his chart. I wonder if Dad read his article ? Matthew posted the chart I’ve included in your interview with Rick this morning.
I like Stewart’s chart because it is quarterly so it provides a really big big-picture view of things. In my own charting, I like to use the HUI, GDM, and XAU but the XAU is the oldest, most diversified and has the most exposure to silver by far.
XAU top 30 components:
# Company Name Security Symbol
1 AGNICO EAGLE MINES AEM
2 ANGLOGOLD ASHANTI LT AU
3 BARRICK GOLD CP ABX
4 BUENAVENTURA MINING BVN
5 COEUR MINING, INC. CDE
6 ELDORADO GOLD CORP EGO
7 FIRST MAJESTIC SILVE AG
8 FREEPORT MCMORAN FCX
9 GOLD FIELDS LIMITED GFI
10 GOLD RESOURCE CORP GORO
11 GOLDCORP INC GG
12 HARMONY GOLD MINING HMY
13 HECLA MINING CO HL
14 IAMGOLD CORPORATION IAG
15 KINROSS GOLD CP KGC
16 MCEWEN MINING INC. MUX
17 NEW GOLD INC NGD
18 NEWMONT MINING CORP NEM
19 NOVAGOLD RESOURCES I NG
20 PAN AMER SILVER CORP PAAS
21 PRIMERO MINING CORP PPP
22 RANDGOLD RES LTD GOLD
23 ROYAL GOLD, INC. RGLD
24 SANDSTORM GOLD LTD. SAND
25 SEABRIDGE GOLD INC SA
26 SIBANYE GOLD LTD SBGL
27 SILVER STAND RES SSRI
28 SILVER WHEATON CORP SLW
29 STILLWATER MNG CO SWC
30 YAMANA GOLD INC AUY
HUI components:
Dan, not Dad.
Precisely so! I could not agree more.
But, of course, there is a natural pace to things; it’s time for a sideways move first.