Here is a slice of history for you. This is a monthly bar chart of the Australian Gold Stock index (XGO) from its inception in January 1985 to April 12, 2002. Take a good look. You won't be able to see it in its present form much longer.
Here is a slice of history for you. This is a monthly bar chart of the Australian Gold Stock index (XGO) from its inception in January 1985 to April 12, 2002. Take a good look. You won't be able to see it in its present form much longer.
For more on what is going to happen to the XGO - please read our $A/$US Gold commentary page if you haven't already done so. Suffice it to say here that on June 28, 2002, unless there is a most unlikely change of heart from the Powers That Be, the XGO will cease to exist.
It would seem that the Australian Stock Exchange - and Standard & Poors who compile the indexes used by the Australian stock exchange - would fully agree with Mr Ford as far as Gold (and many other classes of Aussie stocks) is concerned. Why would anyone in our modern age of finance and investment bother with such an archaic thing as the history of Gold stocks? That would be like Mr Ford having taken a keen interest in the price of buggy whips!
The Australian stock market is going to be dragged into the modern world. It is to be rearranged to reflect what is called a "GICS" or Global Industry Classification Standard. The local stock market is to be put through the "blender" of world financial "best practice", the aim being to allow it to reappear on the radar screens of global mutual fund managers.
Interesting, isn't it. There is absolutely no doubt whatsoever that over the past year, the Aussie Gold index (XGO) has been BY FAR the best performing index in the entire Aussie stock market. There is an equal lack of doubt that Gold stocks are inexorably reappearing on the radar screens of mutual fund managers all over the world. In the midst of this, the XGO is in the process of being expunged. If global mutual fund managers look for a Gold stock indicator in Australia after June 28 this year, they won't find one. Or at least they won't find one produced by Standard & Poors and the Australian Stock Exchange.
Now, take a look at the chart itself. First, look at the entire picture. When the XGO started its run in April 2001, it was down to the level at which it started in 1985. Would you say that, given the upmove over the past year, that the XGO has "bottomed"? Can you see how the present big upmove on Aussie Gold stocks exactly paralells the uptrend in the $US Gold price, which also began in April 2001?
If this chart was of anyhing but GOLD stocks, we hazard to guess that the Australian Stock exchange would not DREAM of discontinuing it - ESPECIALLY if they wanted to lure overseas investors. It's a toothsome chart - after all - just like all the other major national Gold indexes, none of which to our knowledge are slated for imminent oblivion.
In the 1920s, Henry Ford opined that history is "bunk". In the 1990s, several actual historians went one step futher, stating that history was "over". We have noticed that whenever history starts tossing up some inconvenient fact, there is a tendency by many people to ignore it and hope it will go away. We have also noticed an unfortunate tendency for history to become "refashioned" to fit "modern" standards and methods of "thinking".
So, in Australia, the third biggest Gold producing nation in the world, Gold stocks are to be regarded as historical oddities, unworthy of attention. We have noticed one more thing. When those in a position of authority start to tell you that something is unworthy of attention, you had better waste no time giving it your FULL attention. There's something they don't want you to know, see, understand, or do.
Gold is still hovering on the brink of establishing a bull market. Gold stocks have long since done so. Almost five years ago, in mid 1997, the Australian Reserve Bank led the charge towards what everyone hoped would be the final debunking of Gold by announcing that they had sold 66% of their Gold "reserves". Now, the Australian Stock Exchange has decided to deep six their Gold index. Strange people, these Aussies.
