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  Gold Miners Coming To Life?
Posted Under: Commodities
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View from the Observation Deck

  1. Our blog post on 3/23/12 ("Gold investors are bypassing the miners for the metal") noted the outperformance of gold bullion relative to gold mining stocks.
  2. We noted on 3/23 that "the current price-to-earnings (P/E) ratio on the Philadelphia Gold & Silver Index (mining companies) is 12.06, less than half its five-year average of 25.31, according to Bloomberg."
  3. Six months later we can see what may be the beginning of a rally in gold mining stocks (see chart).
  4. From 7/31/12-9/24/12, the Philadelphia Gold & Silver Index posted a total return of 25.6%, compared to 9.6% for an ounce of gold bullion.
  5. The current P/E ratio for the Philadelphia Gold & Silver Index is 16.90, still significantly below its five-year average of 24.21, according to Bloomberg.
  6. The Federal Reserve announced another round of quantitative easing (QE3) on September 13, 2012. 
  7. Could more stimulus further fuel demand for gold mining stocks? Stay tuned.
Posted on Tuesday, September 25, 2012 @ 4:21 PM • Post Link Share: 
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These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
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