Mining Stocks Ready for Take Off

Posted by James Turk. Founder & Chairman at

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Gold has been rising faster than the price of mining stocks.  Here are some statistics to prove this point.

In the twelve months ending Aug. 31, gold has risen 46.5%, but the XAU Index of precious metal mining stocks climbed only 17.7%.  By itself, that is a good rate of return for mining stocks, but not what one would expect given gold’s appreciation over this period.

The current year-to-date results are even more telling.  Gold has risen 28.7% this year, compared to a -3.8% loss in the XAU Index.

In the last two months, gold has risen 21.7%, while the XAU Index climbed 8.4%.  You might notice from these results that the XAU Index is finally starting to show some relative strength compared to its year-to-date results, which is one sign that things may be turning in favor of the mining stocks.  Here is another.

The following chart simply measures the difference between the annual rate of change of gold and the XAU Index at each month end.  So for example, using the 12-month results ending Aug. 31 reported above, the last point plotted on this chart is 28.8%, which reflects gold’s outperformance over this period.