Good find Radagast.
It basically confirms what I orignally said: there is no long term evidence that gold miners have outperformed the metal over at least the last 80 years, as the miners have become cheaper today than they were in in 1940.
Yes,
but you need to include expenses and dividend yields. If we assume that buying gold bullion will have an annual cost of 0.5%, and that the stocks will have an annual dividend yield of 1%, then after 80 years a huge gap would open up from that 1.5% annualized difference. I do not expect mines to grow in value faster than the price of gold, but I do expect them to generally track gold in an exaggerated fashion and pay dividends along the way. I decided I wanted a small exposure to the price of gold, and the record low prices of gold equity reinforced my opinion that the miners had a better than average chance of being what I wanted.
My expectations:
Spot gold: tracks inflation with 15% standard deviation and little correlation to anything, but perhaps highest and most useful in the aftermath of a crisis
Gold bullion buyers: Spot price, less 0.5% annualized expenses if they are careful and very thrifty, plus some deep extra-spreadsheet risks such as theft, fraud, and an extra chance of dying in a home invasion
Gold ETF buyers: spot price, less 0.X% fund-dependent annualized expenses, plus some deep extra-spreadsheet risks (does anyone really think that the bullion watchers at SGOL are really going sit on $1 billion of untraceable metal for the next century, content with naught but 0.0019 of it per year? Not only does history speak against it, but they'd have to be absolute altruistic imbeciles).
Gold mine equity buyers: spot price, plus dividends, plus tracking error, plus an additional annualized 30% standard deviation, does not have the deep risk of outright theft and murder, and at least there is a strong regulatory framework for possible fraud.
