Gold stocks remain relatively cheap in relation to the gold price.
by Prinesha Naidoo
Thanks to the rally in gold prices, gold stocks appear to be back in favour with some even outperforming the yellow metal. So how much more potential, if any, does investing in gold miners still have to offer?
Gold prices gained just over 16% in the first quarter of 2016, marking their best quarterly performance since 1986. Over the same period one of the most watched gold indices, the New York Stock Exchange (NYSE) Arca Gold Bugs (basket of unhedged gold stocks) Index, shot up 60% to 178.24 (see chart below). According to the NYSE, the Index is a “modified equal dollar weighted index… designed to provide significant exposure to near-term gold prices by including companies that do not hedge their gold production beyond one and a half years” (see below for companies included in the index).