Last year, physical gold gained about eight percent in monetary value, while gold equities were among the worst performers of the year. According to Evy Hambro, manager of the BlackRock fund, that's all about to change...
Hambro blames last year's price dips on the managers of the under-performing gold equities, saying they were “atrocious in the way that they've looked after shareholder capital.” Moreover, they weren't diligent in how the re-invested the cash flows into new assets nor did they make shareholder returns a primary focus.
Instead, they were too focused on “growth and production for the sake of growth.” In doing so, they inadvertently dissuaded investors – they simply weren't getting enough attraction from them.
When companies begin to serve themselves more-so than the shareholders, shareholders obviously catch on and lose interest.
However, the rate of under-performance has begun to recede and we're only a couple of weeks into the new year. The Gold & General fund is up 1.9pc since the first of January.
Meanwhile, all the fundamentals necessary to push physical gold prices up as we advanced into 2013 are going strong. Unless interest rates begin rising anytime soon, experts predict gold prices will continue to rally quite nicely.
Analysts predict silver and platinum miners to continue doing well in 2013 just like they did in 2012.
From The Telegraph:
“The fund’s silver exposure was a source of outperformance, in particular Fresnillo: the stock was helped by a positive market reaction to the board’s approval for the development of their $500m San Julián silver project,” said Mr Hambro.
“Our overweight positions in gold royalty companies also aided relative performance. The fund’s holding in Impala Platinum, a major platinum producer based in South Africa, was also a positive contributor.”
As central banks keep incentivizing investors to invest in precious metals via quantitative easing and stockpiling gold and silver themselves, we expect demand to remain rather robust through the end of this year, and likely until the Fed raises interest rates again.
Watch the video below for further insight: