REAL PRICE OF TSX Real Estate & Gold Indexes
Nominal Prices divided by Bank of Canada $CAD Commodity Index
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The chart above shows the "real" price of the TSX real estate index (RE/CCI green dotted plot line) and the "real" price of the TSX gold index (Gold/CCI yellow dotted plot line).
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In February 2019, the CAD$ Commodities Index (CCI blue solid plot line) continued up with crude oil but overshadowed by the CPI drop back below 2% to 1.4%. The nominal price of gold is supporting its real price as is the nominal TSX Real Estate Index supporting its "real " index plot.
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The real price of the TSX Real Estate Index (green dotted plot line) peaked in 1Q 2016 and since then has put in two lower highs and is currently testing the last "high" even with the CCI upticks which usually dampens the real real estate plot. The heat of the 2014-2017 FOMO frenzy is in the history books but spring time in the real estate markets is on with fresh buying.
The summer of 2016 rally in the real and nominal prices of gold was followed by a plunge into 1Q 2017 and the plots continue to work on a new base level support.
War and the rumours of war as well as headlines out of the Middle East, Russia, Europe, China, North Korea, energy producers, the Fed (interest rates) as well as the Trump administration which has produced a slippery wall of worry.
Anxiety is growing along with an apparent renewal of interest in the gold sector even as the demand for the USD shows up.
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In the 1929 stock market crash, Homestake Mining, the representative gold miner of the day, outperformed the DJIA. |
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Gold miner's profitability depends on the nominal price of gold but also the cost of getting the metal out of the ground.
When the cost (fuel, and industrial materials) goes down, the real price rises even in the absence of a nominal price rise. Gold mining share prices rise as the real price of gold rises.
When the cost (fuel, and industrial materials) goes down, the real price rises even in the absence of a nominal price rise. Gold mining share prices rise as the real price of gold rises.
