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Endeavour Silver Corp. Message Board

  • quailrunrd quailrunrd Oct 4, 2013 3:24 PM Flag

    Why are miner stocks priced so low?

    Excerpt from Adam Hamilton's 321Gold article today:

    "But unfortunately 2013 proved to be another extreme anomaly like 2008's stock panic. The Fed's QE3 campaign led to levitating general stock markets, resulting in a mass exodus of capital out of the flagship GLD gold ETF to chase general stocks. This resulting unprecedented GLD bullion selling pushed gold prices lower, eventually triggering a couple of ultra-rare futures forced liquidations. So gold plunged in Q2.

    That was actually gold's worst quarter in something like a century, wildly unprecedented in modern times. Even though market history is crystal-clear, after extreme selloffs come extreme mean-reversion rallies, gold-stock traders freaked out. They sold and sold and sold gold stocks, forcing their prices far lower than gold warranted. You can see the huge disconnect today in this chart, the biggest of this entire secular bull by far.

    Much like during 2008's stock panic, gold stocks plunged far faster than gold earlier this year. While gold dropped back to levels first seen in late 2010, call it a $1300 midpoint, the HUI plunged to levels first seen way back in late 2003! The problem is this is a massive, crazy fundamental disconnect. Back then the prevailing gold prices were only around $400 per ounce! For silver stocks, silver was only near $5.25."

    EXK keeps growing production and reserves quarter after quarter but stock price is lower today than when silver was priced at $5.25/oz. Go figure!

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