The price of gold and gold miner stocks have moved in opposite directions this year, causing pain for some big-name investors, including George Soros, John Paulson, and David Einhorn.
The SPDR Gold Trust, an exchange-traded fund (ETF) which holds bullion, has gained 7 percent this year. But Market Vectors Gold Miners ETF, which holds major gold miner stocks, has dropped 18 percent.
The problem for Soros, Paulson, Einhorn, as well as Seth Klarman and Thomas Kaplan is that many of them acquired gold shares over the past year, sometimes by shifting away from gold itself, The Wall Street Journal reports.
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During past bull markets for gold, miner stocks outperformed bullion.
(Getty Images photo)
But this time around the stocks have suffered from an appreciation in mining costs and government taxation of commodities companies. There’s also concern that mining companies will use any increase in cash flow unwisely.
The share price moves have hit money manager Kaplan’s funds to the tune of $430 million this year, The Wall Street Journal reports
"When you sell your portfolio, you say, well, what's cyclical, and that includes mining stocks," HSBC analyst Patrick Chidley tells The Journal.
Some experts say the decline makes mining stocks a good buy now.
“I don’t see a significant level of downside to the current multiples in the mining industry,” David Christensen, CEO of ASA Gold and Precious Metals, tells ETF Trends. “We think the mining investments in general are very inexpensive today.”
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