"The stock prices of gold mining stocks do not yet reflect the...

"The stock prices of gold mining stocks do not yet reflect the increase in gold mining margins - not even the margin increase that has already occurred as per recently reported quarterly earnings, not to mention the additional margin increase provided by gold's recent rise against commodities. It is unknowable when the market will reassess the situation, but it seems highly likely that it will be reassessed at some point.

Note here that in the latter half of the 1970's gold bull market, it also took a while before gold stocks finally reflected the higher profit margins provided by the rise in the gold price (holders of gold stocks had to go through a frustrating period of under-performance from mid 1976 to roughly mid 1978, while the gold price rose strongly). In fact, gold stocks rose to a higher high relative to gold in the second half of 1980 after the bull market had ended.

Should gold stocks eventually break out from the trading range that has pertained over the past 10 months, a strong move can be expected."

http://www.acting-man.com/?p=9571#more-9571

My comment: One of the factors holding gold stocks back has been rising costs in 2010/11 as the price of energy and commodities outperformed. However, since May 2011 gold has begun to outperform again, e.g. versus the CRB index: