In the past year, SPDR Gold Shares (GLD) have returned 9.2%, while the Market Vectors Gold ETF (GDX) has dropped 23.4%. The former is the largest physically-backed gold ETF in the world, and the latter is the largest gold miners ETF, according to MarketWatch. (STAY AHEAD OF THE CURVE: Follow Kapitall on Twitter)
The difference in performance has been duly noted by both analysts and investors, and any bullish projection on the miners would be considered an intrepid decision. Street One Financial President Scott Freeze has made that decision though, saying, “If you look at miners on a historical basis, they go through periods of lagging gold futures and then a period of substantial outperformance. We’ve seen capitulation with the miners, we’ve already been there. Since the miners have already been lagging, they offer more upside than downside now compared to a fund like GLD.”
He also states that inflation could explode sometime over the next 15 months because of the previous rounds of quantitative easing from the Federal Reserve, so gold is positioned to outperform even other precious metals. If the gold miners take advantage of the timing of the possible reaction that gold could take, and beat out even the GLD’s performance.
Business Section: Investing Ideas
If the inflationary environment that Freeze believes becomes reality, will gold or miners outperform? Below is a list of gold mining and exploration stocks that have seen institutional purchases over the current quarter. Do you think the metal or the companies are better investments?
List sorted by market cap.
Interactive Chart: Use the Compar-O-Matic to compare analyst ratings for the stocks mentioned below:
1. Yamana Gold, Inc. (AUY, Earnings, Analysts, Financials): Engages in gold and other precious metals mining, and related activities, including exploration, extraction, processing, and reclamation. Market cap at $10.80B. Net institutional purchases in the current quarter at 23.5M shares, which represents about 3.16% of the company’s float of 742.77M shares.
2. Allied Nevada Gold Corp. (ANV, Earnings, Analysts, Financials): Engages in the evaluation, acquisition, exploration, and advancement of gold exploration and development projects in the state of Nevada. Market cap at $2.63B. Net institutional purchases in the current quarter at 3.2M shares, which represents about 3.92% of the company’s float of 81.58M shares.
3. NovaGold Resources Inc. (NG, Earnings, Analysts, Financials): Engages in the exploration and development of mineral properties primarily in North America. Market cap at $1.47B. Net institutional purchases in the current quarter at 12.2M shares, which represents about 7.5% of the company’s float of 162.64M shares.
(Written by Danny Guttridge)
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Analyze These Ideas: Getting Started
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Dig Deeper: Access Company Snapshots, Charts, Filings
- Yamana Gold, Inc. (AUY, Chart, Download SEC Filings)
- Allied Nevada Gold Corp. (ANV, Chart, Download SEC Filings)
- NovaGold Resources Inc. (NG, Chart, Download SEC Filings)
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