Tuesday, 18 June 2013

Investing in gold miners and getting out alive (?)

When plotting the HUI index (basket of unhedged gold miners) relative to gold, we've been witnessing an almost uninterrupted slide since nearly three years. HUI/gold made a post Feb 2001 low last month (well below the crisis bottom level of 2008). As gold held above $1400 a couple of weeks ago, HUI/Gold was flirting with its 0.200 resistance. Until few months ago it was difficult to conceive HUI/Gold ever breaking below that 0.200; yet it has and is again challenging its 0.181 bottom.


HUI / Gold, weekly observations over 3 years. 10 weeks (50 days) and 40 weeks (200 days) moving averages are shown in blue and red.
HUI/Gold reached its post 2008 peak about 3 years ago (well before the Sep 2011 peak of gold). The 2012 Mid May &July double bottom of HUI/Gold now is way above the current level. The September/October 2012 recovery only briefly brought HUI/Gold just above its declining 200 days moving average.

Investing in gold miners and getting out alive, is it possible at all? The changing of the tide with gold heading higher might lift all boats, but some may just be beyond salvation. I've been monitoring the (mal)performance of miners included in the goldminerpulse database.
·   Only few successful miners or explorers (about 10%) escaped the downdraft since fall 2010.
·   The median is down 67% (you need a triple to break even).
·   Over 10% is down more than 90% (beyond salvation).
Among the majors, only Yamana is breaking even. The rest is down with the herd. Getting out alive? It's possible, but against the odds.

1 comment:

  1. Beste,
    Ik heb momenteel 3% van mijn financiële beleggingen in goudmijnen (BlackRock Global en Goldfields) en 9% in fysiek goud.
    Ik overweeg om fysiek bij te kopen, maar de super lage prijzen van de goudmijnen steken mij de ogen uit.
    Toch maar wat goudaandelen bijkopen (zeker in BlackRock, want individuele mijnen zijn al helemaal een loterij)?
    Wat zou u doen? Wachten, fysiek, of mijnen?
    Persoonlijk denk ik dat de mijnen binnen dit en 10 jaar wel eens 4 of 5 maal hoger kunnen staan.
    Met vriendelijke groeten,
    W.

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