Time-Tested Indicator Predicts Big Gains for Gold Stocks

The increase in gold prices over the last five years has outperformed virtually every other asset class. From the low $400 range in 2005, gold has soared almost 300% to over $1200 per ounce.

Although many gold stocks have seen substantial gains since 2005, the overall price gains of gold stocks has underperformed the price appreciation of the metal as can be seen by viewing the PHLX Gold&Silver Index, comprised of 16 major gold and silver producers. While the price of gold has appreciated almost 200%, the XAU has lagged considerably with a gain of 96%.

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