See this chart of the XAU to Gold Ratio Here:
The XAU is at a crossroads this week. The EE has pushed the valuations of the miners to a level not seen since early in 2009. Today's smackdown was particularly obnoxious given the sell off in oil. I know that the miners just got caught in the 'sell everything' downdraft of a 1.6% decline in the broad markets, but when Gold is sold back to it's previous close but the miners are whacked for more than 2%, something is rotten.
XOI to Gold chart:
WTIC to Gold Chart:
So, cost of production for the miners is at a 3 year low as the gold/oil ratio is bouncing along that major bottom on the chart but the miners can't seem to outperform relative to the underlying commodity? We all think we know there is suppression of the mining stocks, but this is absurd.
Looking at the XAU/Gold ratio chart above I do think we are reaching the crisis point for this situation. Either the miners are telling us something about the PoG or the massive suppression scheme is due to fail real soon now. Earnings season is nearly upon us and if players like HL, AUY, NEM, ABX, GG, SLW, etc. do not blow out their earnings it could get real ugly around here real quick.
Mostly, I'm just completely pissed off after watching the price action today where it was obvious the raid was coming at around 9:35am and the XAU getting sold across the board at 220.55 like I was watching a star chart or some such nonsense. But, looking at my chart above it's obvious the algos had this programmed in. By the looks of it, though, it seems like they'll have to shit or go blind next week.