patrick.net

There are lots of wise Investors - who seem to think there is a possibility that the Miners should catch up.

But, inflation does takes it toll on extracting the Gold from the ground. Most of the Investment Experts I read have always advocated having a significant investment in the Metal vs the Miners.

Fred Hickey (writes the High Tech Strategist) did some excellent analysis on Gold Miners vs the Metal and discovered in past bull markets for Gold the Mining Stocks don't peak until the Metal has peaked and has begun to drop.

Perhaps the Markets are waiting for Greece to default - or there needs to be a change in sentiment that Gold has not peaked or both?

The hedge funds have been making money holding gold bullion and being short the the shares of gold orientented companies from the producers to the explorers. There seems to have been a build-up of short positions to the point that more shares have been sold than were legally issued by each company. Ask the regulators why they permit this.

wk says

But, inflation does takes it toll on extracting the Gold from the ground. Most of the Investment Experts I read have always advocated having a significant investment in the Metal vs the Miners.

Inflation can add to the cost, but I think the more dominant cost would be the energy required to mine the metal out of the ground. As energy (oil) gets costlier, it will eat into the operating margin of the miner.

wk says

Perhaps the Markets are waiting for Greece to default - or there needs to be a change in sentiment that Gold has not peaked or both?

I don't really know...gold mining stocks have never been looked like a safe haven...they're not the same as gold...the stocks tend to follow the regular equities market more than gold bullion.

ElPrimero says

The hedge funds have been making money holding gold bullion and being short the the shares of gold orientented companies from the producers to the explorers. There seems to have been a build-up of short positions to the point that more shares have been sold than were legally issued by each company. Ask the regulators why they permit this.

Yeah I believe there is a paired trade going on like long bullion/short miners. I don't know how these short positions can be extended beyond the legally issued shares by the company. Is there a way to actually find out if this is true?

John Rubino seems to believe that ultimately the Miners may benefit from rising Gold Prices......
http://dollarcollapse.com/gold/youre-not-imaginging-it-the-gold-miners-are-tanking/

I cannot get myself to short gold since I know for a fact that gold is nowhere near a bubble phase.

I do like the buying miners and ride the way up, as I think the chances of gold price rising is pretty high.