• 754 days Will The ECB Continue To Hike Rates?
  • 754 days Forbes: Aramco Remains Largest Company In The Middle East
  • 756 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 1,156 days Could Crypto Overtake Traditional Investment?
  • 1,160 days Americans Still Quitting Jobs At Record Pace
  • 1,162 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 1,165 days Is The Dollar Too Strong?
  • 1,166 days Big Tech Disappoints Investors on Earnings Calls
  • 1,167 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 1,168 days China Is Quietly Trying To Distance Itself From Russia
  • 1,169 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 1,173 days Crypto Investors Won Big In 2021
  • 1,173 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 1,174 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 1,176 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 1,176 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 1,180 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 1,180 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 1,181 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 1,183 days Are NFTs About To Take Over Gaming?
What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

  1. Home
  2. Markets
  3. Other

Miners Catching Up To Metals -- Huge Run Coming?

Gold bugs are a generally happy bunch this week. But they'd be a lot happier if precious metals mining stocks kept up with the metals themselves. Since early 2011 the largest gold miners have underperformed gold by about 40%, while the junior miners have done even worse (I'm talking to you, Great Basin).

Thanks to this divergence between the metals and the miners, it was possible to clearly understand the monetary destruction endemic in the developed world, conclude that gold and silver were the places to be, make a decisive bet on this thesis -- and still end up losing money.

There are two possible conclusions to draw from this: Either mining as a business has changed fundamentally and will be unprofitable forever - in which case we should just own physical metal and forget about paper proxies. Or the past couple of years were one of those inexplicable divergences from established relationships that produce huge gains when they snap back to normal.

The past month has offered a taste of what the second possibility might look like. The chart below shows that the big miners (represented by the GDX gold miner ETF, red line) have outperformed gold itself (the GLD bullion ETF, blue area) since July. But the two-year gap, like I said, is about 40%, so parity is still a long way off.

Now that the miners have some momentum, it wouldn't be surprising if they made up this ground in no time at all.

Gold miners (red line) versus Gold (blue) since mid-June

Gold Miners vs Gold - since Mid-June Chart

 

Back to homepage

Leave a comment

Leave a comment