Loading ...Gold vs Gold Stocks in 2020 Hindsight !
It is generally accepted that the Gold Secular Bull Began at the turn of the century
20 Years is a Large Sample size in which to compare who would have fared better after buying in Y2K and holding to 2020
A Gold ( the metal) Investor or A Gold Stock Investor
Using $HUI as Proxy for the miners lets find out
As Alex says one should expect 2 to 2.5 X leverage in Miners vs Gold to compensate for the risk
Many Permabulls have said the leverage you get from miners is 3% to 5%
This should dispel this myth.
Gold Stocks Suck !
Ah Fully but you are just cherry picking your start date….what about 10 year results ?
Yah What about that ?
Ready >
Can you all grasp the significance of this ?
This Stock Charts performance tool is great…leaves NO room for debate….these are the results
Full Disclosure …as moderator of this site I too am enamoured with all the various Gold Stocks and I too invest / trade in them and have been for 25 years !
However as time has gone by notwithstanding many short exciting bursts in the prices I have come to realize that
the goldbug narrative that Gold Stocks will make you rich is Bull Shit !
Full Disclosure I am 60% Phys Gold 20% Phys Silver and 20% PM Miners ….the Miners are just to feed my inner masochist !
If this information does not make you at least consider your investing strategy in this sector going forward then
Good Luck to you !
I SEE IT BUT I STILL DON’T BELIEVE IT FULLY ! How about if one Bought in Y2K and sold the top in 2011 ?
For Alex
so the take away is…even if you sold at the very top of history’s greatest Gold Bull …there was NO leverage being in Miners
this surprises even me
Sheesh
Added:
To be fair there was a period…The first 4 years of the 2000s where IF you sold ( in around Jan 2004) you would have come out WAY ahead in Gold Stocks
Alfa8…I believe you told me that’s exactly what you did…if so …Brilliant !
………………
FINAL EDIT
Here is the 20 year chart with % gains at any point along the way
In the LONG TERM Gold has Outperformed the HUI substantially
In the first half of the Bull ( up to the Crash) HUI was outperforming to varying degrees
BUT you needed to be agile and sell and go away at precise times to maximize the leverage
Lets face it NOBODY sells Gold Stocks when they are doing well.
Bottom line:
…For Dependable Steady Safe Gains ….Gold !
….for a wild ride to parts unknown …..Gold Stocks
Nice. What is return if you sell at 2011 top?
STAND BY
I agree!
If the virus spreads to the miner workers then production shuts down. Hence, miners get crushed.
In the current scenario Gold Miners do not offer insurance, but the physical metals certainly do.
Correct. On the other hand, this particular virus seems to leave many relatively young adults minimally symptomatic or sick for just a couple of days, though in bad case scenarios stuck at home, quarantined just because everyone in the area is.
Miners in theory could have problems with supplies in extreme conditions if supply chains are functioning poorly.
MINERS SUCKS
The sickening part is the payroll of the proverbial “Brain Trust” guiding some of these gems. Not to mention options if share prices accidentally appreciate.
By my calculation HUI in the 2000 to 2011 period went up 1,800% and GOLD went up 750%. Can someone verify it?
North the perf chart is from the Beginning of January 2000.
HUI was approx 75 it went down to 35 before it bottomed and it topped at 640 in 2011
That would be 1800%.
I don’t start at the 35 bottom in HUI I started at the turn of the century 20 years ago.
You’d have to be pretty lucky to have bought whatever was in the HUI back then and then sold the top
🙂
There is a problem with taking this comparison at face value and leaving it there. What if stockpicking is allowed?
Let’s say there’s someone who is somewhat competent at stock-picking. No genius, just adequate. You use this person’s choices of stocks rather than HUI. Or maybe a consensus of the posters here on US and Canadian large and medium cap stocks). (Let’s assume that posters here are on average competent.)
Obviously you’d get different results depending on who did the picking. I think you might do better than HUI.
A related matter is going in and out of stocks. You could use HUI, but I say for maximum value you use individual stocks.
We can think of relatively easy systems for screening stocks. You could use them for the GDX and go in and out. It would be pretty easy to do. Your system could be all-or-none or could allow you to be partially in the GDX.
What I think might be better, if you were somewhat good — not even close to a genius — is do this sort of thing with individual stocks. I think the results might be better.
You might do worse too…this example uses the most popular Gold Index.
Pick away though
Have a look
I added a period 2000 to 2004 where Gold Stocks way outperformed….but since then they have Sucked !
This is where timing is important. Case in point – right now – GDX is clearly right on the point of a very large advance. A very small move up of 1 or 2 % will open up the 100% rally I’ve been highlighting in my posts. The miners have been lagging. We’ve all been saying it. Their time to lead is now almost here. Gold may rise 10-20% whilst the miners double. This is what the chart evidence suggests. It’s all about using the charts to guide our entry and exit points.
Point taken NS…BUT Gold Stocks have been lagging Gold since 1996 if you use XAU ( HUI wasn’t around back then)
Will they finally now catch up ?
I am willing to bet 20% of my Gold PF….but a lot can go wrong ….including poor or unlucky timing on the exit.
I say it again…miners sucks ! anyway there are periods where they shines, but you have to sell them even if they seems they are flying to the moon.
If they take 2 years to go from 1 to 10 then they take 2 months to go from 10 to 0,1 !
What about if you sell (at least some of) the shares just when they do seem to be flying to the moon?
What if you look at individual stocks and try to buy them when the companies are viable and the trends are level or up but not overbought — and then when they go lunar you sell, or at least you sell most of them? And you sell the company’s stock if it underperforms, if it trends down, or if there is repetitive bad news?
That’s a lot of work..and you need to get EVERYTHING Right…Owning Gold the Metal is No work
That is Exactly Right Mamare.
That is how it works.
I know you get it and I appreciate your candor and ability to reflect on the facts.
It has been a hard lesson to learn for gold people but if you don’t learn you continue to get hurt.
For many they are an addiction ….they know its bad for them and that they are losing all the time but they need their fix
Thanks my friend
A very very hard lesson Fully….I hope fate will give me one last chance to sell at a profit, then I think I will stay away from this sector for a long time.
Yes Fully, that was my run in the early 00s… but after many years of practice and waiting. Most importantly, then took 15 years off to enjoy it. Too many people I know who have had similar runs in various markets and time frames never bothered to do much with it. My motto: Time is gone forever. Make it count! 🙂
But I have to ask the simple question, why are Plunger and Rambus in the PM stocks?
Do they know something we don’t? 🙂
They presumably are rather good at picking stocks and timing.
Clearly PM stocks vary markedly. If there is a big disparity between PM stocks, then there is ample room for a competent stock picker to do well.
If there is a lot of spiking up and down, a competent timer will do well. A competent timer may have to work harder in a boring market.
I do not subscribe, but I repeatedly am informed here that Rambus is great at timing. He may be good at picking as well. I have seen Plunger’s public work. I do not necessarily always agree with him, but I have the strong sense that he is endlessly better than either throwing darts or following any number of analysts or subscription services when it comes to stockpicking.
Or one can do one’s own work. Or one can do one’s own work and look at subscription services.
From my experience Karl with Rambus, is both his charting and discipline to them.
I’m constantly fascinated by how disciplined he is. And THAT is what I think makes you the money!
That is why I’m here, to stick to the charts.
Good Question
They Know a lot of things we don’t know ….which is why they will ultimately do well with miners …as will you
🙂
Lets face it Buying and Holding Gold is boring and so not sexy….but if you do that first and then when you have “enough” then try you luck in the Stocks
…but IF I had all the commissions I have spent on buying and selling miners and had put it into buying Gold instead…..just the commissions…..I would have a LOT more Gold
I am listening to you Fully………..
Maybe I just want revenge or redemption having blown it by not selling both in the tech bubble and the gold bubble.
I do have a lot of faith in Plunger and Rambus and plan to stick with them.
What impressed me the most is when Spock called the bottom in 16 and Plunger didn’t buy it.
Now he is basing his bull market on world events, mostly economics. I’m holding my stocks purely as a hedge.
I’ll let you know how it turns out. But I do really like the simplicity of your approach.
They are in it for some of the same reasons we all are:
— PM stocks/ETFs are analytically challenging and therefore more rewarding
— are also simply more fun… more action, more dopamine
— belief of potentially greater profits than gold
— not interested in buying and storing physical
Bottom line: the game is more important than insurance
Alfa, I think for me it’s the insurance of owning both phys and stocks.
We have seen it before, if the economy has issues, a hell of a lot of PM stocks fly!
Last time in 08, all you had to do is type in any PM symbol and it took off!!! LOL!