NEM, Newmont and Gold and Silver.

NEM aug 8 2011

GLD aug 8 2011

slv aug 8 2011

The “conundrum” continues. Above we have NEM, Newmont, one of the lager or at least mid tier gold producer.  Below that , the stuff, by way of the GLD which represents 1/10th of the gold per ounce price, and below that by way of SLV, all in US$ terms.

These are 5 year charts. Newmont has gone nowhere, the stuff has roughly doubled over the last 3 years and tripled over 5. out-performed the other two by a wide margin, more than quadrupling in just 3 years. But there is no harmony between the 3. Clearly there is a complete and total disconnect between the miners and the stuff, and then there is a disconnect between gold and silver. Silver looks like it has already peaked and is completing a corrective retracement. Gold has just broken out of its channel.

I suspect that the cause of these non-confirmations lies in the massive growth of the various ETF’s. The simplicity and liquidity of these investment products diverts capital in a disproportionate way into what happens to be in vogue at a certain point in time, without the limitations with regard to individual participants and volumes such as apply to commodity futures. Raw capitalism at its best, someone will be in tears before it is over.