Contrary to popular opinion, the gold stocks are not priced for $1600 Gold. They are priced for the same margins they had at $1600 Gold. Gold stocks performance against Gold reflects their margins and profitability, which has declined materially over the last 18 months. The gold stocks relative to Gold declined massively over the last decade because the Gold price has not moved and costs are up quite a bit.
At present, the key for the gold stocks is Gold breaking above $1900 and sustaining it. The breakout could lead to a steady and potentially big move in Gold. In this scenario, the margins of the gold stocks have potential to increase significantly. The GDX to Gold and GDXJ to Gold ratio charts show huge bases and potential for huge breakouts, should Gold break above $1900 first.