Gold vs. Goldcorp

The proliferation of bullion ETFs changed how people invest in gold and in particular, gold stocks. Bullion is above ground, refined gold. Gold stocks are underground reserves, with political, management, and execution risk. A popular pair trade with hedge funds has been to go long bullion and short gold miner stocks. I started looking at gold miners because some looked like bargains. Following is the gold price to Goldcorp stock price since 2003.

There are two trend lines on the chart. The linear trend has been rising slightly (in favor of gold), while the exponential shows where the pair trade might have gained favor, around January, 2007. Goldcorp (GG) had a huge gain this week after the Fed extended ZIRP to the end of 2014. The Gold/GG ratio now sits between the exponential and linear trend lines.

disclosure: this is not investment advice. I have a small position in GG.

SOPA/PIPA/DMCA

Can't lose investing

Against lukewarm data in the US, and feel good speculation about the Euro debt situation, the tide lifted all boats today except Treasuries.

DOW +0.78%
S&P 500 +1.11%
Nasdaq +1.53%
Gold +0.21%
Oil +0.44%

Even though Treasuries were down today, they are still up YTD. It seems you can't pick any bad investments in 2012. They all go up!

Let's see how things look at the end of March.