Tuesday, April 19, 2011

Physical metals outperforming miners

The title says it all for the last few months for many of the Gold and Silver miners compared to the physical metals.  The people that only invest in physical metals have had better returns for the first 4 months of 2011. I believe that most of the investors that purchase shares of the various miners also have a position in the physical metals, so it's not all bad...

Here is a chart of the Global X Silver Miners Index SIL in the dotted line vs Silver which is the solid black line.
And the performance of Silver which will be represented by SLV vs the Silver miners SIL year to date.
YTD SLV - 42.47%
YTD SIL  -  5.9%

Here is a chart of Gold in the solid black line vs the Gold Miners Index GDX with the dotted line.

And the performance of Gold which will be represented by GLD vs the Gold miners GDX year to date.
YTD GLD - 5.2%
YTD GDX - .28%

There is a general correlation between the physical metal's spot price / comex price and the miners. But there are times when the physical metal outperforms the miners and vise versa. The overall 'health' of the stock market plays a role in the miners shares as well which was clearly seen in 2008/2009.  With the summer months approching and QE2 ending in June, one may want to be very selective when taking a new position in a Gold or Silver equity.  You should also determine if your entry will be a trade or an investment.

Gold hit a all time high intraday today of $1500, Silver hit a 31 year high of $44.18, USD lower at 75.06.

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