We are watching the rising gold price with great interest. Holding between US$315 and US$320 per ounce, the yellow metal is more interesting than it has been for three years. But we heard a commentator say that there is an inverse relationship between the price of gold and the value of gold stocks. Can this be true? As the price of gold goes up, do the stock prices of producers go down?
Not necessarily, we are happy to report. The TSX Canadian gold producers index follows the metal price rather closely. Gold stocks rose steadily during the first half of this year as did the gold price. Both slid lower during June and July and rebounded over the next two months. October saw another dip and another rebound.
The price of an ounce of gold peaked in June at about US$330, fell briefly below US$305 at the end of July, and has since crept upward to its present level. All this up and down can be quite dizzying. We would like to see a steady climb to US$350 over the next six months and up to US$400 by the end of next year. If the price would only stay there, producers and investors would reap the benefits. All we want for Christmas is not our two front teeth, but a little growth and stability in the gold markets.
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