In the Barrons' Abelson thinks gold mines will do what their name suggest (Up and Down Wall Street Saturday, April, 2012 A Golden Opportunity). He not the only one. A lot of well known investors/ hedge funds think gold mines are cheap. They have burned severely their fingers in the last months. Gold mines are already for quite some time ridiculously cheap and they are not following the gold prices up very well. The market prefers the real thing: gold in their hands, even the gold ETF’s are mistrusted because maybe they cannot deliver the physical thing and maybe some other things could go wrong. And that is what you don’t want when you buy gold, all those fears.
For commodity prices it has been quite normal that the commodity producers couldn’t follow the commodity prices. But for gold mines te difference starts to become too big and it seems to get only worse. Many gold bulls are now so disappointed that they to their horror are selling. The sentiment is for the fourth time in a year bearish and so the bulls hope on a contrary movement. Gold mines have too much cash and they are slowly buying each other. Even that has not helped te prices.
The reasons for the bad performance are the preference for physical gold and the higher volatility of the prices of gold mines and the unreliable following of the gold prices.
In the articles quoted below these things are discussed well. Especially the argument that the relative volatility is now not a problem could be the right reason to become bullish. After so much underperformance you can argue it has to turn but markets can remain longer cruel than your patience.
source: Where’s the Beef for Gold Equities? By Frank Holmes
http://advisorperspectives.com/commentaries/global_041312.php
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