Mining the Gold Miners
By ROBIN GOLDWYN BLUMENTHAL |MORE ARTICLES BY AUTHOR
Gold-mining stocks are trading at record lows, relative to the price of gold. Newmont Mining, the world's No. 2 gold miner—with a 3.1% yield—would be a big beneficiary if the price disparity narrows. Shares could rise 50%.
Is it time for investors to start mining the gold miners? Though gold has been weak since hitting its high of $1,900 in September, it's still up 80% since 2008. Gold-mining stocks haven't fared as well. The Philadelphia Stock Exchange Gold & Silver Index (ticker: XAU) of the leading miners is up just 20% over the same span.
Gold has historically outperformed gold-mining stocks, but the ratio between the two is at an all-time high. That could be an opportunity for investors, especially if gold prices move back up as many believe they will, given economic and political troubles in ...