Gold's recent volatility has seen the correlation between gold stocks and the underlying metal fall out of whack, with gold stocks now pricing in a gold price closer to $1000, despite the metal's higher price. The Australian miners of NCM and KCN have fallen considerably in 2011, and US listed NEM was flat for the year, despite gold's rise. The ratios of stock price to gold have reached new lows, and therefore the long stock short bullion trade is proposed. My graph wouldn't seem to load, and I have written a more detailed trade note on this, which can be viewed here: http://www.pimmtrading.blogspot.com/2012/01/gold-miners-vs-gold-price.html I'm guessing the fundamentals behind this move is the increased volatility of gold (and sudden realisation the price may not always rise) increasing the risk priced into gold miners, reducing their previously high PEs. Anyone else support the trade or suggest why stock:gold ratios have fallen so low?