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Don’t Lose Focus – Free Silver! Did the Crypto Market Just Bottom? They had the worst 5-year and 10-year rolling performance ever, they were trading at potentially 40-year lows on a price to cash flow basis, they were the cheapest ever relative to the stock market and Gold and most notably, the Barron’s Gold Mining Index was trading at the same level as 42 years ago! First, we focus on the long-term rolling performance in the gold stocks. Next we compare the gold stocks to the stock market.
The ratio appears to be in position to form a double bottom or a higher low as compared to its 2016 low. 2000 low as to when the gold stocks relative to the stock market were the cheapest ever. Next is one of my favorite charts. We compare the valuation in the stock market with the performance in the gold stocks. The gold stocks performed fabulously after the CAPE Ratio reached major peaks in 1929, 1966 and 2000.
The gold stocks bottomed several years prior to the CAPE peak in 1966 and perhaps we are seeing a repeat of that now. Next we plot the gold stocks relative to Gold. By the end of 2015 the gold stocks were historically cheap by many metrics. Finally, the last chart shows how cheap Gold potentially is. It’s important because the gold stocks could be very cheap when Gold itself may not be cheap.