Adam Hamilton’s Take
“While I’m thrilled with this blistering new gold-stock bull so far this year, HUI 200 is truly nothing. Gold stocks remain greatly undervalued relative to the metal that drives their profits and hence ultimately stock prices. The HUI first closed above 200 in September 2003, when gold was just cresting $375 for the first time in its young secular bull. In 2004 when the HUI averaged 212, gold’s average price was just $409.
This week when the HUI regained 207, gold was trading at $1255. The idea that gold-stock price levels today are fundamentally righteous with gold over three times higher is as ridiculous now as it was back in mid-January at those secular lows. Despite just doubling in a matter of months, gold stocks still need to double again to even approach some semblance of fundamental normalcy relative to the price of gold.”—Adam Hamilton
Can’t argue with reason!