Gold prices have been steady hovering above $1,500/ounce. Still, the major gold stock indices, like the HUI of the AUX, lost more than ten percent. Due to the fierce pullback, gold stocks are now trading at the same level beginning 2008. With that difference, the price of gold was trading $900 per oz back then!It is unlikely this divergence will last for long. Either the price of gold will drop or gold stocks will rise.
My guess is that gold stocks will rise to a more normal relationship with the metal. Despite their apparent undervalue, short-term they could sell off more if we have a major stock market sell-off. That may be the fear that has their prices depressed.
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