price of gold v gold stocks

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    Gold stocks versus the price of gold -
    A few have noted what currently appears to be a disparity between the price of gold and gold stocks – ie the thought is that gold stocks are significanty oversold and will present an opportunity at some time for a decent gain in share price ...

    Before putting my money into this i decided to have a closer look to see the above was in fact the case

    I have looked at this in two ways - one is to do relative comparison charts over a long period of time both in USD and AUD, and the other is to place a 100 day moving average over both gold and gold stock indices..



    the charts indicate that there is in fact a consistant increasing diversion between the two with any reversion totally unlikely......

    in USD over a period of 8 years the diversion is 140 %, which is an average of 17.5% p/a

    To eliminate percent profit differences when gold is at higher price levels compared with lower price of gold levels - i have chosen two periods in time where the price of gold is at the same level – mid 2010 and at the beginning of 2014, a time span of 3.5 years ..... at the beginning of this period the difference was 60% and at the end of the 3.5 year period the difference was 136% - (refer to chart) over this period a divergence rate of 39% p/a..
 
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