When I first got into stacking I wanted to try and get as much exposure to the Precious Metals as possible. Physical Gold is always great to hold, but when it came to Superannuation holding physical isn’t really an option so investing in some Paper Gold looked to be the next best thing. I put some of my retirement funds into Gold and Silver ETFs and bought a few shares in Australian Gold Miners...
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I was always under the impression that investing in Gold Miners was a riskier option because their Share Prices were more sensitive to moves in the Gold Price. The profitability of miners is generally the sale price of the mined Gold minus the All-In Sustaining Costs (ASIC) required to pull it out of the ground. As such I expected Gold Miner share prices to behave more like a leveraged gold play. In other words, if Gold goes up then the Gold Miners should go up by a lot more!
However, it hasn’t really worked out that way. I checked in on my Superannuation holdings today and the Gold and Silver ETFs have actually outperformed the miners in a significant way – even during this building Bull Market in metals. Check out the 5 year Gold Price in Australian Dollars :-
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In the last 5 years the price of Gold has almost DOUBLED in Australian Dollars. Just WOW. The Miners should be doing great. But check this out :-
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This is Evolution Mining (EVN.AX) which looks to me like 5 years of volatile sideways action. Ok, maybe that stock was just a dog. So onto the next one :-
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This one’s Northern Star Resources (NST.AX) and while it looks a bit better I would still say it underperformed the gold price itself. So I thought, maybe I just picked 2 dog stocks. Maybe I need to look outside my portfolio at something more representative of the entire sector :-
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This is the Van Eck Gold Miners ETF (GDX.AX) which is supposed to be a basket of Gold Miners...and yet it also looks, frankly, shite! Check out the period from 2021 to today. The Australian Gold Price has gone from $2200 to $3500 (up 59%) while the Gold Miners ETF has only gone from about $40 to $51.96 (up 30%).
So what's going on here? There have been some Dividends paid by the miners, but they're fairly small. Has Inflation and other economic forces increased the costs for pulling gold out of the ground? Are Gold Miners in Australia being badly managed? Have they wasted too much money on Exploration? Maybe the Gold Miners are just seriously undervalued?
I don’t know the answer (please comment below if you do!) but I do know that I am going to be dumping my Gold Mining shares before the end of this financial year. If I want a leveraged gold play in future I might just get some Options, Futures or CFDs. What do you think?
I tried years back buying mining stocks. It didn’t work out for me. I hope you have better luck.
My Opinion, I think certain banks allow the mines just enough financing to stay alive. Their on a leash.
Hmm that's pretty interesting you would expect them to do better with this rise of gold !BBH !PIMP
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I would do what you say, it's not worth keeping this.
If I had accumulated gold I would save it, but I would buy gold tokens, it is an excellent option in my opinion
On which website could you invest in gold on paper?
I feel like buying mining stocks but I don’t really know about it…