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RE: Are the gold companies 'selling high' now? - 7/15/2010 10:47:37 PM
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GroupW
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From: Up in the hills of Colorado (very BIG hills...)
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The article you cite however is a bit misleading as it does not show the entire history of gold against a basket of mining stocks and does not show a fairly long period of underperfomance of gild against mining equities. It really is only looking at the periods where gold shines (sorry) and ignores long periods when it does not.
If you looked at the whole period, I think you would find the two assets correlate fairly well without a large performance discrepancy.
That said, the article is promotional in nature and not really intended to be an objective analysis.
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“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Dort, wo man Buecher verbrennt, verbrennt man am Ende auch Menschen." - Heinrich Heine
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RE: Are the gold companies 'selling high' now? - 7/18/2010 7:29:10 PM
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prophet
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quote:
ORIGINAL: GroupW
The article you cite however is a bit misleading as it does not show the entire history of gold against a basket of mining stocks and does not show a fairly long period of underperfomance of gild against mining equities. It really is only looking at the periods where gold shines (sorry) and ignores long periods when it does not.
If you looked at the whole period, I think you would find the two assets correlate fairly well without a large performance discrepancy.
That said, the article is promotional in nature and not really intended to be an objective analysis.
Perhaps you can do a better objective analysis? 
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Create in me a Clean Heart, O Lord.
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RE: Are the gold companies 'selling high' now? - 7/18/2010 11:19:14 PM
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GroupW
Posts: 2866
Joined: 11/16/2007
From: Up in the hills of Colorado (very BIG hills...)
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As a matter of fact, I can. It's what I do for a living, so my opinion on that might be slightly biased.
I'm about halfway done collecting the data.
Part of the problem is that the article compares gold holdings to Homestake mining which had some issues over that time frame and ceased to exist somewhere around 1999 or so when it was acquired by Barrick.
One other major issue is that the article compares bullion prices directly to stock prices without accounting for dividends or dividend reinvestment. That can understate returns by up to a full third. Gold actually costs money to store while stocks pay you money while you hold them. If you don't account for that difference, you haven't really analyzed much.
To do the analysis right, you need a multistock index complete with both a price and a dividend index. You also need historical gold prices which are not the easiest to get your hands on. I'm having to use the London afternoon gold fixings as a proxy for US market prices.
Now I just need an index history and some time with a spreadsheet to calculate total returns
< Message edited by GroupW -- 7/18/2010 11:30:35 PM >
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Dort, wo man Buecher verbrennt, verbrennt man am Ende auch Menschen." - Heinrich Heine
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RE: Are the gold companies 'selling high' now? - 7/19/2010 7:18:53 PM
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prophet
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Good luck on yer compilation.
Looking forward to your writeup......
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Create in me a Clean Heart, O Lord.
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