Claims that gold miner stocks are lagging bullion prices due to the popularity of gold ETFs as an alternative are overblown, mining executives say.
ETFs that hold physical bullion or invest in gold futures have grown rapidly in recent years and let investors get exposure to the yellow metal with one trade and low fees.
“That, some analysts say, limited demand for mining shares, formerly the simplest way for investors to gain exposure to gold without paying to store it,” Dow Jones Newswires reports.
SPDR Gold Shares (NYSEArca: GLD), the largest gold ETF, holds $72 billion in assets and is backed by 1,289 metric tons of bullion.
Raising dividends is seen as one way miners could better compete with gold ETFs.
“ETFs are a major competing alternative for investment,” Kirkland Lake Gold CEO Brian Hinchcliffe said in a report earlier this year. [Gold Miner ETFs Eye Dividends]
Many investors are opting to hold gold directly with ETFs rather than owning mining stocks, which are impacted by labor disputes, operating costs and other factors. [Platinum ETFs Jump After Mine Strike Turns Deadly]
GLD, the bullion ETF, has a three-year annualized return of 19.4%, compared with 3.2% for Market Vectors Gold Miners ETF (NYSEArca: GDX).