The Philadelphia Gold and Silver Index of mining stocks is still nearly half of where it was at the peak in 2010. It was in 2010 at a record high of 232.72. On Thursday, July 2, 2020 it was 127.06 (attachment 1). That is 45% lower.
Meanwhile spot gold around US$ 1’770 is much closer to its record high of 1'917 per ounce in 2011 or just 8% below the all-time high (attachment 2).
Gold stocks have largely underperformed the gold bullion and are cheap. There are no big reasons why gold stocks trade at such a depressed level compared to the gold price.
Attachment 3 lists the holdings in XAU (Philadelphia Gold and Silver Index).
Attachment 4 displays the Philadelphia Gold and Silver Index compared to the gold futures contracts. Lately gold stocks have started to outperform gold.
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