I too have often wondered in the past why was/is there a big discrepancy between the gold price trend & the XGD whether it is the US or Oz etf. The natural logic is that higher GP, higher net margin so what is causing the most obvious to break down? Why aren't there record net margins among the gold producers?
I suspect the logical broad view of what makes up the most expense-intensive cost for a gold producer is the main reason value isn't growing among the market caps or uptrends. Labor and diesel are the 2 main expenses and this is also the product of inflation whether it is driven up by money printing, higher interest rates, or sticky inflationary pressures, and the Feds are unable to just use the crude rate hikes to control it.
US stock markets are not supposed to find ATH under this scenario of stubborn inflation, low jobless, and yield curve inversion. Accommodative Feds monetary policy under the current stock market conditions will only propel it to the moon I suspect.
Gold is either rallying due to geopolitics or reflecting the US debt pile issue of sustaining the interest payments. Gold is at the mercy of the dollar index in the end.
DEG closed at an area where we probably need more price action to gauge from the current swing perspective. GP is showing signs of a continued rally with an 'inside bar' as of today but NY will decide. Always interesting times ahead as the markets are forever interacting accordingly.
DEG Price at posting:
$1.34 Sentiment: Hold Disclosure: Held
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