-- Posted Monday, 27 April 2009 | | Source: GoldSeek.com

By Hubert Moolman 

Below are 2 charts, I would like to share with you.  

The first chart plots the JSE Gold Share Index as well as the Rand Gold Price from Jan 2000 to date. Notice how the gold price has left the JSE Gold Share Index behind since Jan 2006. See how close (touching) these 2 were during 2002 and 2003 and again almost touching at the beginning of 2006. Also notice how the JSE Gold Share Index rallied starting towards the end of 2001 as well as again towards the middle of 2005 to catch up with (touch) the Rand Gold Price. Are we at a point where it should start rallying to eventually catch up to the Rand Gold Price?

The second chart shows the ratio between the JSE Gold Index and the Rand Gold Price. Notice how the ratio is at its lowest levels since Jan 2000. The average for the ratio since Jan 2000 is about 0.618 and it is currently at 0.3. So assuming a constant gold price, if the ratio returns to its average, the JSE Gold Index could double; if it goes to all time highs it could triple. It is also interesting how dramatic those rallies were at the end of 2001 and middle 2005.

I believe that we are about at that time where the JSE Gold Index could be ready to dramatically catch up with the Rand Gold Price. The right signals are certainly present; like a bullish $ gold price and lower energy and other input cost. I certainly plan to increase my exposure to these gold miners.

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May God bless you.

Hubert Moolman EL (Economically Literate)

You can email any comments to hubert@hgmandassociates.co.za

-- Posted Monday, 27 April 2009 | Digg This Article | Source: GoldSeek.com

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