Troilus Gold brings potential funding from ECAs to $1.3 billion
The company has signed an additional LOI with Export Development Canada worth $300 million.
Gold was off to the races on Tuesday, easily clearing $2,000 an ounce with many pundits saying a new record high could be reached in weeks if not days.
A chartbook released on Tuesday (ahead of the day’s action in New York) by Merk Investments, an investment advisor and manager of ASA Gold and Precious Metals (NYSE:ASA), a closed-end investment fund established in 1958, includes two long-term charts that show the disconnect between gold mining stocks and the bullion price.
The current ratio between the metal and gold stocks as represented by the NYSE Arca Gold Mining Index, is not that far off historic lows struck in 2015 and shows that gold stocks have been underperforming gold for more than a decade.
If the price of gold stays stable at today’s levels, gold stock valuations would have to more than double to bring it in line with the historical average since the early 1990s.
Balance would also be restored should the gold price halve of course, but there is no scenario where gold dipping into triple digits does not bring carnage to equities.
At the same time, despite the gold market’s rude health, gold mining stocks have also been deeply discounted when compared to the broader market in the form of the S&P 500.
