Gold Mining Stocks Out of Sync With Spot Prices (AUY, BGO)

With gold trading at low $500’s, Yamana Gold (AUY) should be trading in the $5.30’s and Bema Gold Corporation (BGO) at under $2.50. The fact that gold mining stocks haven’t corrected themsleves shows strong speculation by the market that the dip in gold prices will cause some buying interest by, India, China and Japanese investors. Here's a 2-month chart of AUY:

AUY stock has jumped up past the equivalent of gold trading at $540. AUY was my top speculative gold mining stock and it’s moved up tremendously, closing at $5.99 Friday.

I purchased BGO instead of AUY since BGO acted more like the spot price of gold, adjusting itself accordingly. But in the last two days, BGO hasn’t adjusted at all and has instead risen along with the speculation surrounding other gold mining stocks. With gold trading in the low $500’s, BGO should be at $2.50 or less. But BGO closed Friday at $2.86.

*Disclaimer: I purchased 2000 shares of BGO at $2.80.

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