Are gold stocks responding to the rising price of gold?

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We are looking for what StockCalc models are telling us for gold valuations

The build-up to Iran’s weekend attack on Israel drove the price of gold to an all-time high on Friday before falling back to around US$2,370 later in the day. Geopolitical concerns along with the expectation of falling interest rates underpin a rising price of gold. With that backdrop, what are the StockCalc models telling us for valuations here?We used StockCalc’s screener to select the Top 10 listed gold mining companies by market capitalization on the TSX.

A price comparables technique values the company on the basis of ratios from selected comparable companies; An adjusted book value is calculated by multiplying book value per share by its 10-year average price-to-book ratio.is a fundamental valuation platform with tools to calculate and report on value per share for thousands of public companies listed on major North American stock exchanges. StockCalc also contains numerous tools to understand what the stocks you are investing in are worth.

Usually gold stocks have a high correlation to the price of gold. One year ago, I ran the correlation co-efficients between close price and the price of gold over the prior 12 months. Most had an r2 greater than 0.8. I reran that analysis this week for the past 12 months and six of the 10 companies actually had a negative correlation to the price of gold, meaning that the stock prices and the price of gold were generally going in opposite directions. The price of gold is up 12 per cent over the past 12 months, yet five of these stocks show negative one-year returns in the table below.

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