Generalist investors shun gold stocks, despite bullion’s big move – by Niall McGee (Globe and Mail – February 3, 2020)

Generalist investors are largely shunning gold stocks, despite the brisk run up in the price of gold bullion – stalling share prices and straining efforts to raise capital.

Since late 2011, when the price of bullion went into a multiyear tailspin, generalists – or sector-agnostic investors (as opposed to specialist mining funds) – have mostly abandoned gold stocks.

But even as the price of gold has climbed from US$1,050 an ounce in late 2015, to roughly US$1,580 currently, investors have by and large stayed away. “Generalists are still largely underweight, or not involved in the gold sector,” James Bell, analyst with RBC Dominion Securities Inc., wrote in a recent note to clients.

While gold bullion is only about 17 per cent below its US$1,900 an ounce peak in 2011, gold stocks are trading nowhere near their highs. The Gold Miners Vaneck ETF, which tracks the shares of large gold-mining companies, is trading roughly 53 per cent below its 2011 apex.

The lack of generalist interest in gold stocks is a big problem for an industry that is so capital intensive. And with the shrinking of assets under management in specialist mining funds over the past decade, generalist money has only grown in importance as a capital source.

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