Gold Mining Stocks Outperforming Gold

September 25, 2013


According to an update from Forbes, gold-mining stocks are likely to outperform gold itself if the precious metal returns to a rising price environment. The news comes from analysts and fund managers at the Denver Gold Forum in Denver, CO. During the recent bull-run, the metal was outpacing mining shares, a rare occurrence in the market. The upbeat mood about gold involves investors being more willing to on risk at the same time cost-cutting measures are pursued by miners, which is causing shake prices to rise.


Dan Hrushewsky, a senior analyst for gold-mining equities with Jennings Capital, told Kitco News, "What I am seeing is whenever gold goes up a percent or two, mining stocks are going up anywhere from 5% to 20%. I'm starting to see a high sensitivity or beta of mining stocks to gold prices".


Mining operations in several countries have gotten an added boost since they get paid for their gold in U.S. dollars but pay their expenses in their local currency. Other analysts point to the cyclical nature of risk taking and say the mood of investor's has once again returned to a heartier appetite for taking on risk when it comes to gold. Both the Dow Jones Industrial Average and the S&P 500 index have hit record highs this year.


After taking a hit earlier this year, mining stocks are showing signs of recovering. The American Stock Exchange Gold Bugs Index finished on September 24th at 229.52, up from a summer low of 206.87. Shares of Barrick Gold Corp, the world's largest producer, finished on Tuesday at $18.56 compared the summer low of $13.76.