Gold miner stocks are underperforming bullion prices to a degree seldom seen in the past three decades. Essentially, the spread between gold miner shares and spot gold prices is near a 30-year low.
Gold has been stifled over the last two months and even dropped below its $1,600 threshold, with miner stocks and exchange traded funds closely mirroring the movements. However, miners surged Wednesday on heavy volume, lifting hopes that producers may finally catch up to the record run in precious metals.
Market Vectors Gold Miners (NYSEArca: GDX) and Market Vectors Junior Gold Miners (NYSEArca: GDXJ) both gained over 3% on Wednesday. However, both funds are still down about 16% year-to-date and ended last week in negative territory. [Gold Miner ETFs Bounce on Heavy Volume]
Gold futures currently sit around $1,580 per ounce. The spot price recently broke below its long-term support lines.
On Morningstar, mining and metals analyst Joung Park notes that gold miners have underperformed the physical metal as demand from physically-backed ETFs, jewelry and central banks lifted gold prices to new heights.