Sunday, 10 January 2010
Gold Mining Stocks vs Physical Gold
Many Americans have been talking about how gold prices have gone up so much. In US dollars, certainly gold has gone up a lot, but that is only because the US dollar has weakened considerably in the last year. If you look at gold prices in Australian dollars (see the red line in the chart above) you will notice that gold prices have been going down.
The price of gold in Australian dollars has gone down in the last year and this seems to coincide with the Australian (and global) stock market rally that began in March 2009. As stocks move up, gold moves down. The green line in the chart above shows Australia's All Ordinaries index.
The blue line shows the stock prices of Newcrest Mining (NCM), which is a gold mining company listed on the ASX. What is interesting is that the stock prices of NCM seems to be influenced by both gold prices and the stock market. It seems to be more or less an averaging out of gold prices and broad stock prices.