Gold Miner ETFs Outperforming Bullion in August | ETF Trends

Miner ETFs have badly underperformed precious metal prices in recent years. Investors trying to time the bottom in miner shares have been continually burned, but some analysts think that the cheap valuations and dividends in miner stocks could help bridge the gap.

“We think valuation disconnects relative to bullion as well as higher dividend payments could help gold mining equities regain some ground,” writes Joung Park, equity analyst, for Morningstar.

Gold miner shares have lagged behind gold bullion over the past 12 months, but the difference has lessened in recent months – Morningstar’s gold mining list has gained 9.8% over the last three months, whereas gold inched 2.9% higher over the same period. [Weekly ETF Review: Gold, Silver and Miners Lead the Way]

“We think the disconnect between gold prices and valuations for gold miners, as well as higher dividend payouts from many of the larger gold producers, could help to decelerate the free fall in gold mining equity prices by attracting more investor capital flows into gold mining shares,” Park added.