Tiho Brkan | Oct 06, 2013 12:41AM ET
Chart 1: Gold vs Silver ratio recently went as high as 1 to 70 ounces
The chart above shows that as of August 2011 peak, measuring over of time frame of a decade, Gold was up almost 600% while Gold miners were up a huge 1800%. In other words, Gold miners outperformed Gold by about 3 times and actually went up an amazingly high 18 times in a period of 10 years.
Now, I do admit that the majority of the gains came in the beginning of the bull market and therefore I guess the reason the majority complain about Gold miners is because they actually missed the first major move.
The ratio above shows that Gold miners have underperformed Gold since late 2010. Moreover, the ratio is now reaching levels last seen in 2001 (almost at ratio of 1 to 6). Similar to the Gold/Silver ratio, the higher the reading the more oversold the overall sector is and closer we are to another major buying opportunity.
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