Posted by rahrens_1 on September 16th 2011 at 12:28 am
John Hathaway of Tocqueville Asset Management has a great article, with some good graphs, that attempts to explain the reasons for the gold miners under-performing, and the case for exposure to gold miners.
- Gold ETFs – pulling funds that would have gone into the miners in the past. Rob McEwen has echoed these same thoughts
- Doubts Gold Price – is it sustainable, could the price pull back significantly
- Margin Pressure - costs increasing. John has some great charts showing that, yes costs are increasing but not near the rate that the gold price is increasing.
- Hangover from 2008 – gold stocks got hammered back then with everything else
He goes on to build a case for getting some gold miners exposure by showing the leverage opportunities such as dividends, M+A activity, and organic growth with new discoveries. He fully acknowledges that there is more risk and the gold miners aren’t for everyone but builds a great case just the same.
See full article here.