REAL PRICE OF TSX Real Estate & Gold Indexes
Nominal Prices divided by Bank of Canada $CAD Commodity Index
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The chart above shows the "real" price of the TSX real estate index (RE/CCI green dotted plot line) and the "real" price of the TSX gold index (Gold/CCI yellow dotted plot line).
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In April 2018, the CA$ Commodities Index (CCI blue solid plot line) continued its uptrend and is now well above the April 2017 ceiling as CPI and interest rates keep inflation on the watch list. |
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The real price of the TSX Real Estate Index (green dotted plot line) spiked last June but has abandoned its attempt to test the 2015 spike with the growing strength of the CCI. "Real" Real estate has produced an even more dramatic top than the 1Q 2007 peak; a veritable head and shoulders completely detached from its long term trend - and reality.
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) and the Trump administration produced a slippery wall of worry in 4Q 2017.
Heading into 2Q 2018, the wall of worry grows with the revival of the insane fantasy of religious eschatology (Wikipedia) and belief in the manifest destiny that is infiltrating Trump's White House; "God's Plan for Mike Pence" (The Atlantic, Jan-Feb 2018 issue).
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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.
