Gold Vs. Gold Stocks - Part III

[Some thoughts about the ongoing travails of gold stocks relative to the performance of the metal.]

Apologies are in order for taking nearly six months to offer up the third and final installment in this series on gold vs. gold stocks, however, not much has really changed over that time.

For the most part, gold and gold stocks are still doing the same thing they were doing last summer — the gold price is attempting to edge higher, while the miners flirt with another move down to fresh multi-year lows.

It’s been a tough stretch for gold stocks going back more than two years now, and cumulative percentage losses are well into double-digits, while the metal has seen modest annual gains in both 2011 and 2012.

That situation is not likely to change over the near term, but under the conditions detailed below, there is new hope for shareholders beginning as soon as this summer.

Recall that in “Gold Vs. Gold Stocks - Part I“, the historical relationship between the metal and the miners was detailed, and reasons such as the introduction of metal ETFs were cited for the former outperforming the latter in recent years.

In “Gold Vs. Gold Stocks - Part II“, the last eight years or so were broken down into two distinct parts corresponding to before and after the 2008 financial crisis and, unfortunately, little hope was offered for a return to an era that favors mining shares over gold.

As shown in the updated graphic below from the second article, the pessimism expressed in the statement “we may have entered a new phase in the relationship between gold and gold stocks, where gold stock underperformance is the new norm” was clearly not misplaced.

[To continue reading this story, please visit Seeking Alpha.]