With gold resuming its bid Friday night let’s take a look at where the miners as a sector are versus the underlying price.
On a purely one-to-one basis, the recent correction looks a little overdone if you think we’re in a bull market:
A better way to look at it is using an index chart:
That shows that the mining sector is more elevated versus the underlying price over the past twenty years. But not extremely so. In fact, the current multiple of gold-to-sectoral valuation is roughly neutral if this is a bull market. The ratio gets considerably more stretched when things are overheated as junior miners become profitable.
Clearly, the cheaper entry points for bull markets are in extreme sell-offs such as early this year and 2008 but those are not the norm.
If you are considering gold miners then research the individuals!
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
- CCP instructs media on how to report Aussie trade war on itself - January 15, 2021
- US politics is setting course for better not worse - January 15, 2021
- Ghost Melbourne permanent - January 15, 2021
YOU MAY ALSO BE INTERESTED IN
Bitcoin versus gold versus money
Via GaveKal: “Money is the bubble that never
Bitcoin squeezing out other cryptos as it zooms higher
The number of memes around financial assets - and
GaveKal: The world is reverting to the gold standard
Via the always provocative GaveKal: Throughout
ANZ: Stay long gold
Via ANZ: prospects of an imminent