The Philadelphia gold and silver mining index (ticker symbol XAU) has been around for decades, with the publicly available data series going back to December 1983. On that first Dec 19 the XAU closed at 107.06, while gold quoted $375/oz. Fast forward to 2015 January 21: Gold topped $1302 (after the long anticipated QE-bazooka by the ECB), while the XAU closed at 81.12. Even though revenues per ounce rose by 247%, the mining index lost 24.2% in well over 31 years.
Continue reading at the above link for graphs and plenty of evidence.
Graph / Article updates
Posted: 29 Jan 2015, 18:25
A set of 'reference articles', which keep drawing readers, have been updated. Fresh graphs were added or existing graphs were extended with new data. You find the list below, together with the date of the last update.
SPDR Gold ETF - GLD: adding to demand... or to supply?
Posted: 10 Mar 2015, 22:09
The decision of the London bank HSBC plc to close its gold vaults, as revealed by Andrew McGuire, has been the talk of the weekend. This intention certainly didn't evolve over-night. Closing down the vaults may induce some clients to sell their gold assets rather than to seek for an alternative storage vault. What more propicious timing for HSBC to funnel through the expected volume for sale to the futures market? ... and effectively front-running their clients who will realize a particularly poor price.
Note: HSBC is the custodian of the SPDR Gold ETF - GLD. Last year GLD has transferred most of its gold to these vaults.
The most recent sell-off in gold was more than matched by the plunge of both silver and platinum. I felt the articles on the ratio between the precious metals deserved an update. You find the links of the latest updates on the 'About' page at the below link.
A commonly stated explanation for low (or high) precious metal prices are that "low prices are the cure for low prices". The underlying rationale is that low prices impose marginal mine production to close down thereby diminishing global output. High prices would then allow mining companies to ramp up production by bringing on line mines and ore layers that were not profitable at the much lower precious metal prices. These are gross simplifications, tending to overlook the essential.
... and ultimately also addressing the 'peak-gold' dillemma.
Re: Haystack 2015
Posted: 25 Apr 2015, 14:27
Leaving behind the yearly PDAC conference in Toronto:
Kitco News brings back one of your favourite segments as ‘At The Bar’ makes a triumphant return, bringing along with it some heavy hitters in the mining sector. First Majestic Silver’s chief executive officer Keith Neumeyer, CEO.ca’s founder Tommy Humphreys as well as the legend and editor of the Exploration Insights, Brent Cook
Gold and the miners: identifying the bear market logic
Posted: 10 Jun 2015, 15:49
Irrespective whether the latest precious metal recovery sets off a miners rally or is just another dead cat bounce, it 's important recognizing the underlying logic in the trends of gold miners (the HUI index) relative to gold.
Gold Showing Resilience Despite Outflows - ETF Securities
Jun 19, 2015
Guest(s): Mike McGlone ETF Securities
Despite ETF outflows in gold, the metal continues to show resilience, says Mike McGlone, director of research for ETF securities. Live from our Wall Street studio, McGlone says gold is the only metal up in June on the back of reduced Fed tightening expectations following Wednesday's FOMC meeting and global economic concerns. Gold is up about 1% this month, he adds. The correlation between Fed funds futures and the gold price is near the highest ever, McGlone says. Silver has been the best performer in 2015, up 3% year-to-date, but is down 3% on the month, he says. While many analysts are saying that palladium has the best story fundamentally, McGlone is not biting. He explains that palladium is being pressured by China growth fears and profit taking in ETFs. Kitco News, June 19, 2015.
Unlike Gold ETF's, silver ETF's have seen their strongest months since long. Value investors feel better days are ahead, the same way they did with WTI crude ETF's around new year. Mike McGlone is still wary of what the elevated gold/silver ratio wants to tell us: silver being above all an industrial metal, the high Au/Ag ratio may imply sluggish economic growth world wide.
Some more personal observations.
Growth fears may pressure palladium and platinum prices, yet that also hampers supply: most platinum/palladium producers are losing money, unless they hedged at past better prices. Nickel producers with a palladium by-product may still thrive as does the precious metal recovery. That's however a narrow base to build on: over 60% of the demand is to be covered by PGM producers with little or no credits for by-products. The current supply deficit may not shrink because of sluggish demand but stay level or rise because of mine production sliding or being disrupted.
It’s often heard that gold takes the staircase up, but the elevator down. A gold rally would then consist in a gradual process of relatively small but consistent daily upward moves. The gold cartel (bullion banks and investment banks, backed by the FED) would not allow gold to rally over 2% daily.
Once ignited, swoons in precious metals are thought to aggravate by forced liquidation of future long positions and the redemption of leveraged products and bullion ETF’s...
All of this is a mixture of facts and myths, causes and consequences, hidden motives and secrecy, misinformation, manipulation and opportunism. While I can do very little about most of those, I will try to clarify some of the facts in order to eliminate a few of the myths.