Bullion and precious metals miners have benefited from the recent shift toward safe-haven assets and ongoing accommodative monetary policies around the world. However, miners and related exchange traded funds could continue to outperform in a strengthening gold environment.
Precious metals’ “gains are much lower than that of ETFs that hold gold mining stocks; these ETFs have more than doubled in value” over the first seven months, Todd Rosenbluth, S&P Global Market Intelligence Director of ETF Research, said in a note.[related_stories]
Matt Miller, S&P Global Market Intelligence equity analyst, attributes the sudden outperformance in gold miners to the high levels, and in some cases financial, leverage among the mining industry. Furthermore, many miners are seeing higher margins and strong free cash flow, which have been due to a dip in All-In Sustaining Costs – AISC is a standardized measure of cost reporting that projects full-cycle costs to produce and sell one ounce of gold, so a lower AISC contributes to wider profit margins.