Gold Soars, Miners Snore (For Now)

Chart of the Week #24

As I told you recently, the HUI index, which tracks major gold miners, is sitting at about half of its record level from September 2011. That's despite gold soaring to new highs.

This points to a major disconnect between these stocks and the yellow metal itself.

But today’s chart captures this disconnect in a way that’s just as compelling, if not more so. It shows cumulative fund flows into major gold miner ETFs like the VanEck Vectors Gold Miners ETF (GDX) and VanEck Vectors Junior Gold Miners ETF (GDXJ).

What’s surprising is that, even with gold’s performance through the roof, flows into these ETFs haven’t followed suit. In other words, interest in gold miners still isn’t there, even with the metal near record highs. Just take a look.

In fact, fund flows into gold ETFs are so low right now, it’s almost as if no new money has entered the sector in nearly a decade. Just take a look at the red line above.

Keep in mind, gold has surged an impressive 141% during that same period.

Once again, this shows a massive disconnect between these stocks and the metal itself. I call it the "golden value gap." And it drives home a key investing principle: find value where others aren’t looking.

Regards,

Lau Vegys

P.S. The key takeaway here is that this is just one of many signs pointing to gold stocks being a screaming buy right now. As the gold bull market heats up, a lot of these quality companies will turn into 5-baggers, 10-baggers, or more. But you’ve got to know where to look. That’s exactly why a portion of our Crisis Investing portfolio is focused on these stocks—many of which Doug himself owns. And just a few days ago, we published a new issue featuring a fresh gold stock recommendation.