by Jordan Roy-Byrne, CMT
The Daily Gold
Gold mining stocks as a whole have underperformed Gold since 2007. The GDX to Gold ratio from its 2007 peak to its 2015 bottom declined 80%.
The Gold price peak in 2008 was about where it bottomed at the end of 2015. That’s over seven years of a flat market coupled with steady increases in costs.
Too many people associate the Gold price level with where the miners should be trading. It’s important to note that the performance of gold stocks relative to Gold depends on company margins, which can be squeezed on both sides outside of a bull market.
Take the last 18 months, for example. The Gold price declined, and mining costs increased. A double whammy is why miners fell more than the Gold price.