Time To Get Gold?

The shine is completely off gold these days — which means it might be time to buy in. At least gold bugs hope so.

An article in the Globe and Mail’s Report on Business provides a glimmer of hope for Vancouver’s large coterie of gold miners, prospectors and promoters.

Unfortunately, it’s of the feels-so-good-to-stop-hitting-my-head-with-a-hammer variety.

Gold prices have been sinking for some time from their great highs of 2010 when they reached more than US$1,900/ oz.

Those were the glory days and Howe Street brokers were buzzing because gold stocks were considered relatively cheap in comparison to the underlying metal.

So the word went out to buy gold company stocks instead of the metal itself. Better value.

But, since then, most retail investors have been gaining exposure to gold through Exchange Traded Funds (ETFs) instead of the stocks, closing that value gap. It’s much easier to buy and sell ETFs than stocks.

And, adding to gold mining stocks’ woes, the price of the metal has recently dropped to just below $1,600/oz.

There is some reason to cheer up, however, the article indicated yesterday.  

The price has been down so long, retail investors are now fleeing gold ETFs as well. This is usually an indicator that they have lost all faith in gold.

This could be that low point where contrary buying starts, the report says.

In other words, gold’s misfortune may be gold stocks’ fortune.

It ain’t much, but it’s probably all gold bugs have to go on right now.