Continued Bank Runs In Europe, Battle Lines Drawn & Gold
August 28, 2012
Today 25 year veteran Caesar Bryan spoke with King World News about the ongoing bank runs, battle lines being drawn in Europe and gold. Bryan, from Gabelli & Company, also discussed the massive undervaluation of the mining shares. Here is what Caesar had to say: “It’s very interesting because gold closed yesterday at $1,666, and the XAU, index of gold equities, closed at 166. So the XAU is about 10% of the gold price. We’ve bounced off the lows for the gold shares, but I still think there’s plenty to go.”
Caesar Bryan continues:
“If you go back, the XAU has historically traded at its low end of the range when it was around 20% of the value of the gold price. Today it’s almost exactly 10%. This shows how preposterously undervalued the mining shares are at this point in the cycle.
Just to get back to the traditionally undervalued point for the mining shares, it would require a doubling of the value of the equities that comprise the XAU. The chart below shows the dramatic underperformance of the gold shares vs the gold price for the last 7+ years: