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Why Gold is Down: Is the Run in Gold Coming to an End?
Pinnacle Digest writes: Why is gold down? Has the rally in gold ended or is there higher highs ahead for the yellow metal many believe so deeply in. Sy Harding reviews the stark numbers which suggest gold may be in for a further correction.
The stock market has been a loser on a buy and hold basis over the last 12 years. The S&P 500 is still 14% below its peak, hit in 1999. Gold has surged up 625% during the same period. It was a regularity to hear predictions of $2,500 gold by year end and $5,000 shortly thereafter. Where have these predictions gone?
There has been a major disconnect between the rally in gold and value given to the broad basket of gold stocks or the HUI Index. Gold stocks remain heavily undervalued in comparison to the metal, with companies such as Barrick trading at only 1.5 times earnings. Gold stocks are telling us that what they produce is set to decline in value, not rise. While everyone has been waiting for gold stocks to shoot upwards, Sy Harding argues it may not be gold stocks which need to correct, but the metal itself.