Salient to Investors:
The gold-mining industry has underperformed bullion for each of the past 6 years. The weight of gold behind ETFs has quadrupled to 2,530 tons since the start of 2007. Neil Gregson at JPMorgan Asset Mgmt said the industry has done nothing to persuade investors that hold gold ETFs to buy gold shares instead, and said his form’s allocation to gold equities is down to 20 percent, the lowest in at least 2.5 years.
Joseph Wickwire at Fidelity Investments said gold producers have done themselves a huge disservice over the past 12 years promoting gross margin as opposed to net or operating margin.
The average cash cost of 10 of the biggest gold miners was $694 an ounce in Q3 2012, up 49 percent from Q3 2010, while the average gold price rose 35 percent in the period.
Goldman Sachs said the gold cycle has turned as the US recovery gathers momentum and investment holdings shrink.
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