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Y es I think it is quite clear, that all other things remaining equal , there will be a direct link between movements in the gold price and movements in the share price .

Furthermore this link isn't a linear one ..it brings about a multiplier effect . Take today for an example , a 1% drop in the gold price brought about a 2.7% fall in the fall in share price ..it has to be said that this is exceptional and won't be due entirely to the gold price fall entirely the same principle remains...let me explain

Using hypothetical figures , let's assume that the following is the situation ..

1. The gold price is $1700, the AISC is $1200 bringing about a profit of $500 per share
2. Let's assume that there are 1000 shares in existence then the earnings per share (EPS) is 50 cents per share

Now let's see the impact of a 10% rise in the gold price

1. Gold price is now $1,870 but AISC will remain at $1200 so the profit now rises to $670 which will equate to an EPS of 67 cents... so an increase of 10 per cent in the gold price has resulted in a 34% increase in EPS, giving a multiplier effect of 3.4

Let's now assume the price of gold decreases by 10% to $1530...the profit now falls to $330 ($1530 -$1200) which will result in a corresponding fall in EPS to 33 cents per share...in other words a 10% fall in gold price has resulted in a 34% drop in EPS creating a multiplier effect of minus 3.4...

The multiplier effect today was minus 2.7

So why was there a difference ? A multitude of reasons .

1. Markets dont behave rationally
2. Retail and institutional investors will be entering and exiting the market for a whole host of different reasons
3. Impact that external factors have on the price , inflation , interest rate expectations etc .
4. Company news flows
5. Fund manager notes on a company with associated share price forecasts ( though god knows why )
6. Outflows to Bitcoin or elsewhere
7. Index priced funds altering individual holdings to retain their benchmark with movements in FTSE
8. Significant events...new discoveries, take over rumours , production downgrades (or upgrades)
9. Flight to or away from deemed " safe haven assets "
Etc etc

So yes gold price has a significant impact on the share price , but that assumes all other things remain equal , and the markets react rationally ..none are true

Yes it is insider .
When it boils down to it , I think that the taxi driver the hair dresser her husband et al are acting out of the "fear of missing out"

What my son did say was that bitcoin along with Blockchain technology , is here to stay, in the same way that the internet is , whether I liked it or not , and on that point he also said that the take up rate of bitcoin is quicker than it was for the internet .

He maintains that volatility will gradually diminish with time and that it's already much less than what it was when it started up (which is true) and that this trend will continue

Time will tell

Regarding your other post , I have met 2 people who have just invested a lot of money in bitcoin ,. My taxi driver 2 days ago and my hairdresser ( and her husband) yesterday .
None of them knew why they were investing apart from getting on the bandwagon and making huge profits like everyone else . There was a spring in their steps

There's a sell signal if ever I saw one .

Thanks Gnome

That's a very good point about the optionality theory.

My final post on this topic. Centamin has $300 million in its bank account, which will always be valued at that ...or at todays prices 5000 bitcoins which are highly volatile in terms of value .. Which would you prefer ? Answers on a postage stamp in a sae please

So why would Tesla accept bitcoin as legal tender ?
As an aside Tesla bought $ 1.5 billion worth of bitcoin in Feb as an investment .
It is accounted for as an intangible asset, because bitcoin isn't legal tender . . Bitcoin increased by 30 % over the past month ...Tesla had to book a $ 55 million dollar loss because as an intangible asset it has to be valued at its lowest transactional value during the period .
When it sold 10 % of its bitcoin holding at a profit one month , it made more profit from bitcoin than it made from manufacturing cars.
Like I said ..time to pause and reflect on the implications for gold prices and by definition cey share price

One question I wanted to ask though relates to volatility.
One bitcoin is worth approx $ 60,000
Let's say I buy a car from Tesla (who are warming to the idea of using bitcoin as payment again )
The car costs $ 60,000 or one bitcoin which I transfer over to Tesla and they accept my bitcoin as legal tender and give me the keys to the car .
The flowing day , bitcoin falls to $50,000
Who bears the loss ?

With respect Mr B . You are missing the point . ETF gold is gold backed ...it appears that investors are switching from ETF gold to ETF bitcoin ..you do the math ..
This could mark a fundamental shift in the way gold is valued , which could affect all gold miners .. that is all I am saying
Time to pause and reflect for me .

Giant squid ...did you ever think for one moment that your one sentence comment about bitcoin would generate so much debate and controversy ?

To be honest , I am up in the air after talking to my son about bitcoin ..I don't know what to think anymore . He is a bitcoin bug and a lot of what he said made sense

Steve / Canetoad.
I am yet to have my enlightened chat with my son yet , but here is a thought for you.
Yesterday it was my taxi driver who had bought bit coin, today it's my hairdresser ( honestly )
Bit coin price is nearly 10 times more volatile than the price of gold , so shouldn't all newby investors in Bitcoin also invest in gold as a hedge ?

By the way , only around 30% of gold is held by in
investors . Gold jewelry accounts for around 45% with the remainder being used by tech companies and central banks ..

Regarding the respective market sizes .there appear to be gold etf traders which are backed by gold, switching to bitcoin etf s which are just futures ...if there are huge outflows of cash from gold ETFs then surely gold will have to be sold to execute the sale...won't this dampen the gold price as well as switch the market cap from Gold to Bitcoin ?

So where do you stand on it both in terms of a threat to HOC share price ?
Also lets take a hypothetical case of me buying a car for $60,000 and paying for it with one bitcoin ...if the price of bitcoin crashes to $30000 tomorrow ..who takes that loss ?
Will it be the company who sold the car to you ?
If so , why on earth want to accept it as payment ?

I think part of the problem affecting all miners is the growth of bitcoin as an asset class. A new ETF is being launched tomorrow for Bitcoin
There is word that gold ETFs are dwindling in popularity
Thoughts ?

Well ..I have put out a call to my son tonight ..he has offered to explain to me in simple terms of the errors of my ways ...in a very patronising tone of voice ..
It isn't that long ago that he was shocked to discover that I was father Christmas

Good idea Steve...where's the booze !!!

My taxi driver told me yesterday that he is thinking of using his savings from his deposit for a new house to invest in bitcoin so that he can buy a house outright on the profits from it when he sells it in a few months
Mmm...

Maybe I have Steve .what do you mean and what is its relevance to Bitcoin
Please enlighten me ..sincerely .

Hi Goldgnome .you spoke a few weeks ago about a bitcoin medal and a gold medal for the Olympics.
Have you changed your mind on that one ?

Me thinks the emperor has no clothes.