What am I missing?, page-42

My last post showed a chart which showed a slightly positive bias for gold in the short to medium term after a double bottom.
What a difference a day makes! I've said enough times the POG can be hard to predict. That continues.
You will get some commentators blaming rising bond yields for the falling POG. Looking at the 5 year chart below, that seems to be the case with a recent obvious inverse relationship.



However, if you look at the long term chart, you can see that doesn't hold true over longer time frames. In the 1970's through to the 1980 peak, bond yields rose massively and so too did the POG. Then they both dropped sharply during the 1980's - again together. Then the bond yields continued to fall over the next 30-40 years but the gold price went sideways for 20 years and then rose sharply ever since. So longer term, there is no reliable correlation at all between bond yields and POG, although yield reversals might trigger shorter term moves in POG as we have seen in the last two years.



Some argue that it's more about real interest rates but they are negative now so you can't blame them for the 6 month correction in POG.
I'm sure it's much more complicated than just yields and rates. This correction might simply be a case of POG rising too far too fast into last year and needed a correction. Bond yields reversing might have been all the excuse the market needed. The important point I take from the charts above is that POG can go up by multiples at the same time as strongly rising bond yields. So I'm not worried if yields continue higher or if they fall lower again.

The important thing for TTM from a long term perspective is that the resources were determined using a POG of around US$1,200 for Dynasty's 2.1mill oz at 4.5g/t and Jerusalem's 1.3mill oz at 14.5g/t. So those ounces will be economically viable at US$1,200 and very profitable at higher prices, especially above US$1,500. Currently above US$1,700.
So while the POG is pushing the sp around with a lack of news and it's looking like we might have to wait for any boost from POG., I think we will see big re-rates on positive news and especially on the release of the JORC resource. Then the company will work on growing the 3.4mill ounces and that should see the sp climb over time even in a flat POG environment.
I still expect a stronger POG going forward following the recent record stimulus, similar to what we saw in the years following the GST stimulus when the POG more than doubled over the next couple of years after the initial sharp drop, but I don't expect to need to count on it as TTM grows its resources over the next couple of years.