Prime Time for the Midas Metal Miners

Focus: COMMODITIES

Gavin Graham Image Gavin Graham Chief Strategy Officer, INTEGRIS Pension Management Ltd

Gold miners have underperformed the metal significantly for some time now, but this just may be the time where they pull back into sensible parity with bullion, notes Gavin Graham of The Canada Report.

The price of bullion has been rising, but gold mining stocks have been lagging the price of the metal badly. Major gold miners such as Barrick (ABX), Newmont (NEM), and my recommendation Goldcorp (GG) are all down for the year.

However, the situation is changing for the better. The exchange traded fund for gold mining companies, the iShares Global Gold Index Fund (Toronto: XGD), rose 5% against an increase of only 2% for the SPDR Gold ETF (GLD). The latter fund tracks physical gold, with each share representing ownership of one-tenth of an ounce of bullion.

However, since the beginning of 2012, and over the 12-month period to mid-October, the situation is very different. Year-to-date, physical gold is up 12.3%. Over one year, it has risen 4.6%, and that period included a major slide in the price of the precious metal last fall.

By comparison, XGD is down 5.9% year-to-date and 12.9% over one year.