A glance at 50 of the most in-demand listed gold stocks, busy running away from the rest of the global investment universe.

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May 26, 2009 9:57am ETF BASIC NEWS NYSE:GLD

gold-bullBy now it can be argued that the most positive defining instrument of the global appetite for risk and reward is represented by gold bullion, as also seen in gold bullion exchange traded funds (ETFs), of which the biggest by far remains the SPDR Gold Shares ETF, which currently holds physical gold bullion of just less than 36m ounces, worth USD 34.5bn.

SPDR Gold Shares, which represent a proxy holding in physical gold bullion, is trading, like gold bullion itself, just 5% below dollar price highs, seen during March 2008. By the same token, silver bullion and silver ETFs are trading roughly 25% below the price high seen for the physical precious metal, also recorded just over a year ago.

The performance of gold bullion and gold ETFs has not only outclassed any other kind of publicly available and widely traded investment in absolute terms, but has also given a steadier 12-month return, defying the traditional perception of volatility attached to the metal. Established gold royalty companies such as Franco-Nevada have also performed very well, much in line with gold ETFs, in trading close to highs at this point in time.


Seen across the broader investment horizon, gold bullion and gold ETFs look pretty good. Listed stocks generally have rebounded over the past few months, but remain a long way off highs seen mainly during the former parts of 2008, and latter parts of 2007. The MSCI world equities USD index is around 40% off its highs; broad commodity indices such as the Dow Jones AIG Commodity Index and Reuters/Jefferies CRB continue to sit nearly 50% off highs, indicating that investors are either yet to buy into the broader theme that hard assets – generally – will protect against inevitable inflation, or that commodity pricing beyond gold bullion is yet to gain real upward traction.

The role of gold bullion beyond its uses as ornament and industrial material continue to enchant not only investors in actual and proxy physical gold bullion, but also in listed gold equities. The preparedness of professional investors to be in both camps was recently illustrated by Paulson & Co Inc., which famously scored gains of USD 3.7bn betting against (mainly US) banks in 2007 and 2008. Paulson & Co currently holds around 10% of the SPDR Gold Shares ETF, equal to about 111 tonnes of the physical metal.

Full Story: http://www.mineweb.net/mineweb/view/mineweb/en/page33?oid=83838&sn=Detail


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