REAL PRICE OF TSX Real Estate & Gold Indexes
Nominal Prices divided by Bank of Canada $CAD Commodity Index
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The chart above shows the "real" price of the TSX real estate index (RE/CCI green dotted plot line) and the "real" price of the TSX gold index (Gold/CCI yellow dotted plot line).
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In September 2017, the CA$ Commodities Index (CCI blue solid plot line) continued to hang under a weakening energy sector that is set for a seasonal drop. There is CCI support at or just below the March 2009 Pit of Gloom low and currently the CCI remains near the lower bound of this 14-15 year channel.
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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. It's turning into an even more dramatic top than the 1Q 2007 peak; a veritable head and shoulders completely detached from its long term trend - and reality. Real Estate has never looked so perilous.
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 and the Trump administration are going to produce a slippery wall of worry in 4Q 2017.
The TSX Gold index has been under performing the TSX Real Estate index for the last 54 months but the commodity crash (lower fuel and material costs) is a strong positive for gold miners and explorers going forward especially if the nominal gold price breaks out of the top of the base begun in 2013.
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 and the Trump administration are going to produce a slippery wall of worry in 4Q 2017.
The TSX Gold index has been under performing the TSX Real Estate index for the last 54 months but the commodity crash (lower fuel and material costs) is a strong positive for gold miners and explorers going forward especially if the nominal gold price breaks out of the top of the base begun in 2013.
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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.
