Anyone have any ideas why the gold equities are about 20 -25% below where they should be relative to the gold bullion price? I'm taking in consideration that the US dollar has an effect but still surprised that equity prices are where we were when bullion was at the low 900s.

I can think of a few reasons:

1. mining is energy intensive. The worst financial crisis in modern history only took oil down to the 40's, and then for only a short time. Since then it's been in a rising trend, therefore adding to the cost of mining and subtracting from the bottom line.

2. gold has only made a new high in $US. It is still below its previous high in most other major currencies. If your books are in those currencies your profits are affected by the exchange rate of the $US, since that is the currency gold trades in. Meanwhile your costs are booked in your home currency which the rising price of gold will only partially offset.

3. once bitten, twice shy. Many investors are still smarting from the crash, which took mining stocks down hard. Remember, the herd always sells at the bottom and buys at the top.

4. hedge books. Many senior producers have huge unrealized losses from badly managed hedges. Smart money knows this and stays away.

There's probably a few more reasons, but that's all I can think of at the moment.

ebear