A 14% rise in the gold price since late June has given us a 39% rise in the ASX gold stock price index. If I buy bullion today, I know I will have the same amount of gold in 10 years. If I buy the same alue of stocks, what will I have in 10 years? Gold miners rarely return cash, almost universally preferring to plough profits into exploration or acquisitions. Most have mine lives of less than 10 years. Will they have more resources in the ground in 10 years time (without capital dilution) than today? They would have to for equities to beat gold bullion as an investment. The emergence of an easily accessed gold bullion market has greatly altered how gold stocks should be priced. There are some more expansive comments on this this at (VIEW LINK).
John, are you able to re post the link, I get an error when I try the link above?