REAL PRICE OF TSX Real Estate & Gold Indexes, ie: Nominal Prices divided by Bank of Canada $CAD Commodity Index
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The chart above shows the "real" price of the TSX real estate index (RE/CCI green dotted plot line) and the "real" price of the TSX gold index (Gold/CCI yellow dotted plot line). July 2019, StatsCan revised their data set on the CCI metric and produced a new peak at July 2005 which I have labelled.
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In October 2019, the CAD$ Commodities Index (CCI blue solid plot line) ticked down. In July 2019, StatsCan revised their data set on this metric and produced a new peak at July 2005 (Hurricane Katrina) above the July 2008 WTI price peak and since those peaks, the trend is lower highs. Since April 2013 nominal real estate prices have indeed been the gold standard with the divergence widening relative to nominal gold. (solid plots) |
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The heat of the 2014-2017 FOMO frenzy is in the history books but the real estate markets are still on with fresh buying in Ottawa and Montreal where they have recently set new single family detached price highs and in Toronto with new higher peak condo prices .
Both the nominal and real gold plots are showing upside momentum as the wall of anxiety is growing along with the demand for the USD.
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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. In the 1929 stock market crash, Homestake Mining, the representative gold miner of the day, outperformed the DJIA. |
