Some analysts attribute the widening disparity in the performance between miners and the underlying precious metals to geopolitical and economic concerns that have pushed investors to hedge with physical metals. Daniel Brebner, head of metals research at Deutsche Bank, remarks, “when you buy gold through an ETF or direct, it’s not future. It’s now. A lot of investors are looking at risks much more immediate than five or 10 years away.”
Additionally, as basic commodity prices rise, mining expenses also rise. “The exposure that you get to the gold price is diluted through the equities because they are seeing that kind of cost inflation,” comments Brebner.
Agnico-Eagle Mines CEO Sean Boyd stated that miners will need to contemplate raising dividends to attract investors and improve their market values, reports Liezel Hill for Mining Weekly.
For more information on gold or silver, visit our precious metals category.
- Global X Silver Miners ETF (NYSEArca: SIL)
- Market Vectors Gold Miners ETF (NYSEArca: GDX)
- Market Vectors Junior Gold Miners ETF (NYSEArca: GDXJ)
Max Chen contributed to this article.