 JSE Gold Index
Hubert Moolman
30 April 2009
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.
###
27 Apr, 2009
Hubert Moolman
CA (SA)
Cape Town
South Africa
email: hubert@hgmandassociates.co.za
blog:
http://blogs.24.com/hubertmooolman
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Hubert Moolman is a Partner at ProAct
Chartered Accountants and the owner of HGM & Associates.
321gold Ltd
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