GOLD SHARES COULD EXPERIENCE WEAKNESS FROM HERE

GOLD SHARES ARE EXPENSIVE RELATIVE TO THE GOLD PRICE

Gold shares are not cheap. In fact relative to the price of the metal, gold shares are historically expensive. This view is based on the ratio of the XAU index relative to the gold price. Have a look at the weekly chart of this ratio below...it shows data from from January 2008. The downtrend is drawn in from the peak at 0.2389 made in October 2007(not shown) and now the ratio is at 0.07798 which is just a third of where it was back then. This has caused some analysts to suggest that the shares are therefore cheap.