Gold Shares To Outperform Going Forward
Gold recovered well today currently trading at 1370
Newstrike is consolidating mid 50’s for the next move up, Torex is consolidating at 1.40 and we await drilling news
I was sent this today and totally agree!
caliche
It is very healthy in the context of this secular bull market in gold to see the gold shares trading with fear. The shares of both the XAU and the HUI gold indexes hit new all-time highs. The interesting thing is that they were dragged there kicking and screaming. There is still tremendous fear as seen on a 10 year chart.
Even though the shares have hit new all-time highs, they are now lagging the net performance of gold.
The XAU net outperformed the price of gold for a period of 8 years. It is normal for the shares to significantly outperform gold during a bull market.
Since the financial collapse in 2008 the XAU has moved below the price of gold in terms of percentage gain over the past decade. If gold and silver simply stabilize near these levels, the shares will dramatically outperform the price of gold going forward.
The shares are simply too cheap on a relative basis and as I keep saying, “The wind is at their backs.” You will see a substantial increase in both earnings and cash flow for key producers going forward, this will help to drive the shares much higher in terms of valuation. As gold continues to rise on a longer-term basis, this will have an additional turbo charge effect on the gold shares.
Eric King
