XAU vs Gold: Gold Miners are very oversold. Back 1983-97 the ratio was about 3X. Then GLD became an alternative investment and people switched out of miners into GLD and the ratio rose to 6X. Today it's 11X. It would be wise to switch out of GLD and into XAU or just buy ABX the leader, beaten down as much as any miner. Gold should end higher this year. I think miners would advance even in the unlikey event that gold dropped 10% this year. They're that beaten down.
The market can stay illogical longer than you can remain solvent. Remember that. The miners (not just gold miners) can continue to suck for awhile longer. At least in the case of Barrick, there *should* be a turnaround in share price once Pascua Lama starts producing, that's what I'm counting on - but it does mean I have to hold this POS for another year at least. I do not like holding for such a long time (I'd much prefer to get in and out of the market quickly, i.e. book a 10% gain after holding a stock a couple of months at the max), but I'm stuck in this POS and refuse to sell. GLTA
I'd listen to conference call for the progress of what they said they were going to do. Also- buying here with a dividend yield of 2.4% might give you a nice 'total return' when they start to raise again (possibly even this year). 'Free cash flow' should start to really take off '14 through '15.
Need to be careful, all miners stocks are suffering because of the flatline in precious metals. this leverages the miners because the earnings are missing the calls. You are correct - if the metals go up, miners will make their earnings calls and the stock should rise and probably in a leveraged fashion. Need to note ABX has missed 4 straight earnings call, if it comes in at 1.00, it will still miss the call at 1.06 and likely not do squat.
You are wrong. Gold doesn't have to go up. If it's flat now to years end, ABX will move much higher. I look at proven gold, earnings and managment changes. I am not married to ABX. Should the ratios or fundamentals change dramatically I can sell or buy more. Right now it's a no brainer to rotate out of my GLD and into ABX.