One of the things I love most about TA is the way it can graphically depict a “fundamental” condition.  For example – the present value of PM stocks relative to the price of gold…

As shown in the XAU:$Gold ratio/combo chart below, despite the phenomenal run since the beginning of this year, PM stocks are still way undervalued relative to the price of gold – as they are presently valued as if gold was trading at about $500-550/oz.

Which is why I sleep good at night and don’t fret over the latest price squiggle or fraudulent govt report, knowing that “all markets revert to the mean“.

In fact, I expect when a critical mass of the general public finally begin (or are forced by circumstance) to wrap their minds around the “nature of money“, this ratio will be on its way to a similar symmetrical reaction above the mean.

XAU-Gold Ratio