Dan, more good points. The essentially mathematical phenomenon that I expressed is, in itself, sufficient to explain the lagging HUI, but this guy has pointed out even more reasons. ===============================================================
PH, The HUI to gold disparity is a pretty hot topic right now and fwiw, ItsAllCyclical has had a lot to say about it on SI's Natural Resources board. His latest:
More on HUI lagging performance vs gold:
Don Coxe seems to favor reasons #4 and #11. Don's timing is sometimes questionable, but his "big picture" analysis is usually very sharp.
1) Euro move and other currencies have gone too far ST. Many waiting on sidelines for all too typical interventions.
2) COTs numbers indicative of past tops
3) No real pullback since 420.
4) Disbelief that prices are sustainable.
5) Lack of new money into sector. The "hot" money is chasing tech stocks.
6) Those who would have invested in gold in years past are investing in currencies instead.
7) Gold ETF pulling money out of gold stocks. Money redistribution within gold funds and an easy method has been provided of going long the physical.
8) Shorting. Those surpressing gold are supressing the stocks hoping to cover lower once they've started their "slam".
9) "New" investors/funds are buying calls in big-cap liquid names vs buying the shares.
10) Faith in the economy that jobs will come around. Deficits will get cut, rates will go higher ST which will support the dollar. As such gold move is temporary.
11) Trade deficit bad, but no inflation as meassured by the CPLies number. TIPs available as well. Again, new money on the sidelines waiting for more "traditional" inflation reasons to hedge w/gold.
12) Big swoon in China or energy could cause commodities in general to take a hit. Gold getting lumped in w/other commodities.
Added per this post: 13) HUI artificially weighed down by SA issues due to Rand strength. GOX index has broken to new highs showing the "true" picture.
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