These charts might explain why gold stocks appear to be pricing...

These charts might explain why gold stocks appear to be pricing in a higher gold price. Many mid cap gold producers sp’s have held up this year (with some exceptions) despite negative operating cash flows in their March and June qtr reports.
The POG shows reasonably close correlation to the US long bond but there can be time lags of several months. The long bond has been steadily climbing through 2014 while the POG has flattened off over the last 4 months. The long bond made a new high in late July just before dipping on US data. However that data has been priced in and the long bond has moved higher again so appears to be continuing its uptrend. The POG can lag the bond moves but it does appear likely to follow the long bond price to new highs for 2014 - unless the long bond breaks its up trend and reverses sharply lower. For now there is no sign of that and the trend remains up. These charts suggest the short to medium term POG direction is more likely to be up from here assuming the correlation continues. This might explain why the GDX and GDXJ are so close to their 2014 highs.