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Is The 50-year Gold Mining Bear Market Coming To An End?

Commodities / Gold and Silver Stocks 2018 Aug 23, 2018 - 09:29 AM GMT

By: Hubert_Moolman

Commodities

Gold stocks is in a 50-year bear market when measured in gold. This (very) roughly means that on average, it has been more economical to buy gold rather than to mine it.

Interestingly, South African gold mining production peaked two years after, in 1970, as if to confirm that mining was getting rather uneconomical.

There are a peculiar set of reasons why gold mining was so uneconomical, and this I address in my other publications.


Below, is a long-term chart of the Barrons Gold Mining Index (BGMI) to Gold Ratio (chart from longtermtrends.net) which shows this bear market:


After the peak in 1968, the ratio just kept on falling. Interestingly, during the 70s as well as from 2001 to 2011, gold had a great bull market, yet the gold stocks were under performing gold.

Will this bear market ever turn? Yes it will. When will it turn? When the conditions that causes it turns.

Some of these conditions have already turned, or are in the process of doing so. One is the oil price, a major factor in gold mining margins, peaked in 2008, and appears to be close to a massive decline.

From a technical point of view, there are signs that indicate the turn is happening. Below, is a comparison of gold’s correction from 1980 to 2001 (bottom chart) and the BGMI/Gold Ratio (top chart):


Both corrections appear to have the typical 5-move corrections (from top to bottom). It appears that the BGMI Index/Gold Ratio is at the end or very close to the end of its correction.

For more on this and this kind of fractal analysis, you are welcome to subscribe to my premium service.I have also recently completed a Silver Fractal Analysis Report as well as a Gold Mining Fractal Analysis Report. You can also subscribe to this blog (enter email at the top right of this page) to get my regular free gold and silver updates.

Warm regards,

Hubert

“And it shall come to pass, that whosoever shall call on the name of the Lord shall be saved”

http://hubertmoolman.wordpress.com/

You can email any comments to hubert@hgmandassociates.co.za

© 2018 Copyright Hubert Moolman - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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