Spread relationships can trade in a range for a while, until they don’t.  Sometimes there is a fundamental reason why a spread might deviate from the norm, other times there is no good explanation.  One common spread people look at these days is between the gold mining stocks and gold itself.  The relationship gets more complicated once you dive down into individual names.  Big gold miner Newmont Mining has appreciably lagged the gold miners and gold itself of late.  The question for investors is why and whether it has become cheap enough?  In today’s screencast a look at when reliable market relationships break down.

Items mentioned in the above screencast:

When spreads break down.  (Dynamic Hedge)

Gold prices are surging.  Newmont Mining (NEM) trades at a near single digit P/E ratio.  (Globe and Mail)

Newmont fundamentals.  (YCharts)

Relative price chart of Newmont Mining, the SPDR Gold Trust (GLD) and the Market Vectors Gold Miners ETF (GDX).  (StockCharts)