by Claude Erb, via SSRN
Abstract:
If there is a “long-run equilibrium” price relationship between gold and gold mining equities, then 1) the price of gold “suggests” that in the short-run the price of gold mining equities could rise 100% and 2) the price of gold mining equities “suggests” that in the short-run the price of gold could fall 50%. A popular ratio of the price of “gold miner equities” relative to the price of gold tells the same story. Though the long-run price of gold may be characterized as a "golden constant," in the long-run gold mining equities are seemingly a "wasting asset."
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