9% Jump In Gold Equity/Gold Bullion Ratio Last Week Suggests Massive Surge In Gold & Silver Stocks Coming

Introduction

Gold prices drive gold mining profits and, looking at the performance of 4 gold mining category ETFs relative to the current gold bullion price (referred to here as the  Gold Equity-to-Gold Bullion or GE/GB Ratio) provide the extent of under- or over-evaluation of the category where the higher the ratio the better.

Both the Ratio and the MunAiMarkets Gold/Silver ETFs Model Portfolio were UP substantially week ending May 9th. Below are the details:

The GE/GB Ratio

The Ratio ended 2024 at 45.9 and, historically, very low levels such as that have always been followed by gold stock up-legs and gold miners tend to not only mean revert to normal GE/GB levels, but overshoot proportionally to the upside. The GE/GB Ratio was UP 0.6%, on average, in April but jumped 9.2% just last week alone and is now UP 15.9% YTD. That portends to a coming massive surge in gold stocks – and silver stocks, too.

The MunAiMarkets Gold/Silver ETFs Model Portfolio

1. The VanEck GOLD Miners ETF (GDX): UP 7% w/e May 9th 
   • consists of producer companies that operate fully functioning mines that extract and sell gold
   • # Holdings: 63
   • Average Market Capitalization: $23.0B
   • GE/GB Ratio: UP 4% w/e May 9th
2. The VanEck Junior GOLD Miners ETF (GDXJ): UP 9.6% w/e May 9th
   • consists of developer companies that take over once explorers find a promising deposit conducting feasibility studies to determine if the deposit can be mined profitably, work on securing permits, financing, and planning the construction of the mine.
   • # Holdings: 88
   • Average Market Capitalization: $6.0B
   • GE/GB Ratio: UP 6.6% w/e May 9th
3. The Sprott Junior GOLD Miners ETF (SGDJ): UP 10.0% w/e May 9th
   • consists of explorer companies that are searching for new gold deposits
   • # Holdings: 35
   • Average Market Capitalization: $4.0M
   • GE/GB Ratio: UP 6.8% w/e May 9th

Sub-Total: Gold ETFs UP 8.9% w/e May 9th, on average; GE/GB Ratio UP 5.8% w/e May 9th.

1. The Global X Silver Miners ETF (SIL): UP 9.2% w/e May 9th
   • consists of explorer companies that are searching for new silver deposits by conducting geological surveys, drilling, and sampling and are referred to as “junior” mining companies.
   • # Holdings: 35
   • SIL to SLV Ratio: Unchanged w/e May 9th

In addition, below is how the representation of royalty/streaming companies performed last week:

1. The U.S. Global GO GOLD and Precious Metal Miners ETF (GOAU): UP 8.6% w/e May 9th
   • consists of companies (merchant “bankers) that provide alternative financing to mining companies by purchasing future production (i.e. streaming) or revenues (royalty) in exchange for upfront cash payments.
   • # Holdings: 28

Summary

In total, the above 5 gold/silver related ETFs encompass 87% of the gold/silver ‘mining” sector (i.e. 253 companies) and they were UP 8.9% w/e May 9th.

In addition,

• The SPDR® Gold Shares ETF (GLD) was UP 3.0% w/e May 9thl and
• the iShares Silver Trust ETF (SLV) was UP 2.3% w/e May 9th.
• The Gold-to-Silver Ratio went UP 0.7% w/e May 9thto 103.0suggesting that there is significant room for gold to decline or silver to rise to bring the ratio back into line within its historical range. My money is on silver being the precious metal that makes the big move going forward.