Incredibly, with gold high consolidating in a $1500 to roughly $1800 range, the XAU:Gold ratio spent the better part of 2011 and 2012 working its way back down to the panic inspired extreme lows of the 2008 banking and financial system crisis panic.
Notice, however, that the ratio only briefly tested the sub .10 lows in 2008 and early 2009, leaving long tails or shadows on the monthly trading bars. Since the end of 2011, the ratio has camped out very close to those lows.
What does the chart mean? Well, for one thing it means that today mining shares are about as cheap as they were during the financial crisis panic peak in 2008 relative to gold metal. While we do expect the XAU:Gold ratio to decline with gold in a raging bull market based purely on the math, we do not really expect to see the XAU:Gold Ratio revisiting the panicky 2008 lows, except, perhaps in spikes lower; not when gold is high consolidating – like now.
Gold is consolidating, not plunging. The miners are discounting the latter, not the former, for now.