With the carnage of the last three weeks, the XAU is now testing all time lows on an absolute basis. As of this writing it hasn't fallen below its late 2000 lows, but it's only a hair's breadth away. That being said, relative to the spot price of gold, miners are by far the cheapest they've ever been. Back in late 2000 when XAU put in it's all time low of 41.61, gold was trading around $285/oz. One ounce of gold could buy you 6.85 "shares" of the XAU. Today, one ounce of gold can buy you almost 24 "shares" of XAU. Said differently, the gold and silver miners are nearly four times cheaper today as they were the last time XAU was this low. Of course one could argue that gold is four times overvalued today, but that would it so far below the cost of production that no gold mining company could exist. (The current average extraction cost per ounce is estimated to be around $1000-$1100 - essentially the price of gold today)
Play wisely..
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