Large cap gold miners started lagging the yellow metal

Whenever interviews of expert mining investors or seasoned CEO's of gold mining enterprises massively emphasize the brilliant outlook for the industry for years to come, you can almost bet on it a correction is about to follow. 

Streamers are the backbone of a miner portfolio

Seasoned investors in mining stocks have seen all of what a commodity cycle brings: fortune but above all hardship. Mining is a 'wasting asset' and anyone expecting 'leverage' on precious metal prices must have realized that such is not uncommon on any upswing of metal prices, but rather general on any decline.

Miner ETF's going down with the herd

Miner ETF's are not a valid alternative to avoid the lagging of precious metal miners compared to bullion or bullion ETFs.

Designed to outperform

A benchmark among Large Cap Gold Miner ETFs

The first severe correction since the onset of the gold miner recovery that started late January raised doubt and fear among investors. Not surprisingly miners gave way much more than did precious metals. As a result miners slid from overvalued relative to where gold was a month ago to undervalued at present.

Precious Metal Mining ETFs: a benchmark

The 2013 cyclical gold bear market and the crash of precious metal mining stocks leaves investors shattered. Some have been lured in again during the early 2014 recovery, while others are waiting to get their toes wet. A few mining analysts left the scene, while many saw their audience dwindle. Investors with limited funds and/or time for a due diligence study may gain exposure to the precious metal mining sector through purchasing one of the exchange traded funds (ETF's).

Soros gambles on a swift gold recovery

George Soros confused the markets with his gold ETF sales. Now he seems having put a on a far riskier bet. Not only he bought a fair stake in GDX, the main large cap gold mining ETF, Soros also gambles on a swift gold recovery though a considerable long position using call options on the Market Vectors Gold Miner Junior ETF (GDXJ).

Benchmark of Precious Metal Mining ETFs

A first glance: year-to-date graphs of :

1. GDX, Van Eck's large-cap Gold Mining ETF,
2. GDXJ, Van Eck's junior Gold Mining ETF,
3. SIL, the Global X Silver Mining ETF,
4. GLDX, the Global X Gold Explorer ETF.

Gold explorers have a long way to go

Several gold explorers have popped and some have doubled (or even more). Does this mean the best days already are behind us? Not quite. If some gold explorers put down a stellar rally over the last few weeks, this mainly is some recovery after the dire malperformance during the preceding months, when explorers were sliced and diced, leaving investors with a couple of dimes on the dollar.

Junior gold miners and explorers lagging majors

On the gold miner pulse page of this blog, I have been pointing to the dramatic underperformance of juniors in the brutal miners swoon caused by the recent severe gold correction.

Since early April, junior miners ceased to outperform mining majors. Juniors nor majors were able to keep up with the pace of the gold price rising during summer. Whereas miners withstood a first pull back of the gold price rather well, the correction in the second half of September turned out to be dramatic. Junior miners and explorers paid a high price and much of their advantage over major miners is melting away. 

Junior miner performance on that blog page is measured using the MVGDXJ index. That index is going back to end Dec-2003 and offers a relatively long perspective when compared to the GDXJ Etf itself.

Precious metal mining ETFs GDX and GDXJ poised for recovery

Miner underperformance

The underperformance of  precious metal miners relative to silver and gold bullion has become disgraceful. It has been the subject of many an article lately and illustrious mining investors have been pointing to this anomaly.