REAL PRICE OF TSX Real Estate & Gold Indexes, ie: Nominal Prices divided by Bank of Canada $CAD Commodity Index
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The chart above shows the "real" price of the TSX real estate index (RE/CCI green dotted plot line) and the "real" price of the TSX gold index (Gold/CCI yellow dotted plot line). July 2019, StatsCan revised their data set on the CCI metric and produced a new peak at July 2005 which I have labelled.
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In August 2019, the CAD$ Commodities Index (CCI blue solid plot line) remained flat. Last month, StatsCan revised their data set on this metric and produced a new peak at July 2005 which I have labelled. The nominal real estate plot is at the highs and since April 2013 real estate has indeed been the gold standard but both the nominal and real gold plots are now starting to show upside momentum. |
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The real price of the TSX Real Estate Index (green dotted plot line) peaked in 1Q 2016 but since then has now put in three lower highs. 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.
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's trade wars which have produced a slippery wall of worry.
Anxiety is growing along with the demand for the USD.
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.
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In the 1929 stock market crash, Homestake Mining, the representative gold miner of the day, outperformed the DJIA.
This Gold Miners/Commodities RATIO link is a live chart of the $HUI:$CRB ratio. |
