Historically speaking, how badly are the miners performing, really?
I noted in a previous entry (The Invisible Hand) that on April 8, something fishy happened, wherein gold and silver shot up to all time highs, but the miners had completely "decoupled." This proved prescient.
Someone knew something. Until the May 1 massacre, the metals-to-miners ratio increased at what seemed an unprecedented rate. Turd has conjectured that TPTB "allowed" silver to shoot up, knowing margin hikes (and the egregious May 1 stop-triggering) were in the works. That seems right.
However, that metals-miners decoupling seems to have ended, and we're back to the miners performing pretty shittily, but at least tracking the metals respectably. So I decided to look at how gold has compared to the ^XAU index historically.
In other words, at any given time in the last 15 years, how many shares of ^XAU could you buy for an ounce of gold?
I charted the 20 day exponential moving average of the $GOLD:^XAU ratio, and was surprised at what I saw. Yes, you can buy more ^XAU shares for an ounce of gold than ever before (leaving aside the 2008 market crash). That means gold is indeed at a high historical value relative to the miners. But ... that appears to be the result of a long term trend.
For the first 5 yrs on the chart, gold is increasing in value relative to the miners at an even faster rate than over the last 5 years. So, whatever the case may be with ETF's siphoning off demand, and Trader Dan's hypothesis of hedge funds shorting the miners, over the long term, nothing that unusual is really taking place.
The $GOLD:^HUI ratio is lightly visible in the background. That ratio is certainly more volatile and exaggerated. Today, an ounce of gold buys you 2.85 shares of ^HUI. In 2000, it could buy you around 5 (values not shown on vertical axis). From 2001-2004, that number crashed, as the miners outperformed gold. But those three years are the only years where that pattern is obvious. And since 2004, the long term trend of the $GOLD:^HUI ratio has been either sideways or up.