Gold Miners Feeling Pain

Not long ago I wrote about how gold miners appeared to be dropping more than the underlying commodity. As I saw it then in the charts, the divergence wasn't unusual. Now it is.

Pull up a chart of pretty much any major gold miner, compare it to the commodity, and you'll see what I mean. In the example here I am comparing the gold ETF with Kinross; be sure to use the US stock here to eliminate CAD:USD exchange rate effects.

The chart shows week end (August 8), and today the divergence is growing larger. I am seeing a lot of miners down 25% to 40% over the previous 6 months. Over the same period, gold is trading in a relatively narrow range of -10% to +10%.

Lots of commentators are talking about gold nowadays. One common conclusion they come to is that money is rotating from all commodities into other sectors. I don't know the answer but I am watching closely. I hold one gold miner and I need to decide what to do.