Gold Stocks Are Worse Than Gold, Better Than Crypto | The Mesh Report

Gold Stocks Are Worse Than Gold, Better Than Crypto

The Gold Enthusiast June 27, 2022 Comments Off on Gold Stocks Are Worse Than Gold, Better Than Crypto

The original article was published in September 2016. I just finished reading it again and find no reason to edit or modify its contents. The price of gold peaked in the summer of 2016 – shortly before my article was written and published – at $1357 oz. (monthly average closing price). At that time the GDX (ETF index of gold mining shares) peaked at 30.60.

Both gold and gold mining shares (gold stocks) have been lower and higher since then, and the past six years have seen a fair amount of volatility. Lately, both gold and gold stocks have undergone downside corrections since their most recent highs earlier this year.

So where are we now?

GDX (Gold Miners ETF)

Gold is currently priced at $1827 oz. and is up almost thirty-five percent since its peak of $1357 oz. in July 2016.

The GDX index of gold mining shares is currently 29.66. That is a decline of three percent during the same period in which the price of gold increased by more than a third.

Even if the three percent decline in gold stocks could be changed to a three percent increase, the mathematical calculation for comparison purposes would result in a more than ten-fold increase for gold over gold stocks.

More recent performance is similar. Since their respective peaks in 2020, gold is down eleven percent; and GDX is down by thirty-seven percent, more than three times as much as gold.

Finally, from their respective peaks in the past few months, the gold price has declined by eleven percent, whereas, GDX is down by twenty-seven percent.

Gold Stocks To Gold Ratio

Below is another chart (source). This one is the HUI to Gold ratio…

The HUI is an index of various gold mining stocks. The long-term downward trajectory is indicative and confirmative of everything we have said about the underperformance of gold stocks relative to gold.

The down beat goes on for gold stocks, but it’s not a bad as crypto.

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