Over the last two years, gold has appreciated to a far greater degree than have the gold miners, largely based upon a broad expectation that the price of gold could non sustain its momentum and price range. Though gold has come down from its summer high, gold has still dramatically outperformed the large miners over the recent past.
So far in 2011, gold has appreciated over 16%, while the large miners have broadly depreciated. See the 2011-to-date comparison chart of the Market Vectors Gold Miners ETF (NYSEARCA:GDX) and the SPDR Gold Trust (NYSEARCA:GLD).
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And over the last three months, these gold miners have depreciated to a greater extent than gold. See the three month comparison, below:
Below are seven large cap gold miners that are traded in the United States. I have provided their present yields, as well as their 1-month, 6-month and 2011-to-date performance rates. I have also provided the performance rates for gold.
These companies suffer risks that a pure commodity will not, such as political risks, mine productivity, distribution costs, management negligence and fraud. As the performance data shows, recent miner performance has varied dramatically from company to company, with gold consistently beating the majority.
These large miners do provide a dividend, while gold does not and often requires a storage cost. If rising gold prices continue, then the miners should eventually follow that rise and undergo an upside correction.
Given the significant disconnect between current gold prices and gold miner valuations, it is possible that these miners could eventually start to increase in share price even if gold does not. Nonetheless, if gold should move downward, it appears the miners are depreciating to a leveraged extent.
Disclaimer: This article is intended to be informative and should not be construed as personalized advice as it does not take into account your specific situation or objectives.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.