Gold miner ETFs continue to drastically underperform bullion prices. Gold producer stocks are posting their weakest relative performance to bullion in over three years.
The relationship between gold miners and bullion “has gotten to an extreme enough level that I believe something major will occur over the next few months,” says Robert Sinn at the Stock Sage blog.
He sees two likely outcomes. “Gold could fall substantially (over $100/ounce) which would make the current valuations of the miners more reasonable on a relative basis,” or gold miners will rally and “revert to the mean.” [Capitulation Time for Gold Miner ETFs?]
Russ Koesterich, global chief investment strategist at iShares, says investors need to understand that gold and gold miners are distinct asset classes that can behave very differently.