Written by Danny Guttridge

In the past year, SPDR Gold Shares (ARCA:GLD) has returned 9.2%, while the Market Vectors Gold ETF (ARCA:GDX) has dropped 23.4%. The former is the largest physically-backed gold ETF in the world, and the latter is the largest gold miners ETF, according to MarketWatch.

The difference in performance has been duly noted by both analysts and investors, and any bullish projection on the miners would be considered an intrepid decision. Street One Financial President Scott Freeze has made that decision though, saying, "If you look at miners on a historical basis, they go through periods of lagging gold futures and then a period of substantial outperformance. We've seen capitulation with the miners, we've already been there. Since the miners have already been lagging, they offer more upside than downside now compared to a fund like GLD."

He also states that inflation could explode sometime over the next 15 months because of the previous rounds of quantitative easing from the Federal Reserve, so gold is positioned to outperform other precious metals. If the gold miners take advantage of the timing of the possible reaction that gold could take, they could even beat out GLD's performance.

Interactive Chart: Use the Compar-O-Matic to compare analyst ratings for the stocks mentioned below:



Business Section: Investing Ideas
If the inflationary environment that Freeze believes in becomes reality, will gold or miners outperform? Below is a list of gold mining and exploration stocks that have seen institutional purchases over the current quarter. Do you think the metal or the companies are better investments?


List sorted by market cap. (Click here to access free, interactive tools to analyze these ideas.)

1. Yamana Gold, Inc. (NYSE:AUY): Engages in gold and other precious metals mining and related activities, including exploration, extraction, processing and reclamation. Market cap is at $10.80B. Net institutional purchases in the current quarter is at 23.5M shares, which represents about 3.16% of the company's float of 742.77M shares.

2. Allied Nevada Gold Corp. (AMEX:ANV): Engages in the evaluation, acquisition, exploration and advancement of gold exploration and development projects in the state of Nevada. Market cap is at $2.63B. Net institutional purchases in the current quarter is at 3.2M shares, which represents about 3.92% of the company's float of 81.58M shares.

3. NovaGold Resources Inc. (AMEX:NG): Engages in the exploration and development of mineral properties primarily in North America. Market cap is at $1.47B. Net institutional purchases in the current quarter is at 12.2M shares, which represents about 7.5% of the company's float of 162.64M shares.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Kapitall's Danny Guttridge does not own any of the shares mentioned above. Institutional data sourced from Fidelity.

Related Articles
  1. Mutual Funds & ETFs

    Pimco’s Top Funds for Retirement Income

    Once you're living off the money you've saved for retirement, is it invested in the right assets? Here are some from PIMCO that may be good options.
  2. Chart Advisor

    Watch This ETF For Signs Of A Reversal (BCX)

    Trying to determine if the commodity markets are ready for a bounce? Take a look at the analysis of this ETF to find out if now is the time to buy.
  3. Investing News

    What You Can Learn from Carl Icahn's Mistakes

    Carl Icahn has been a stellar performer in the investment world for decades, but following his lead these days could be dangerous.
  4. Mutual Funds & ETFs

    ETFs Can Be Safe Investments, If Used Correctly

    Learn about how ETFs can be a safe investment option if you know which funds to choose, including the basics of both indexed and leveraged ETFs.
  5. Mutual Funds & ETFs

    The Top 5 Large Cap Core ETFs for 2016 (VUG, SPLV)

    Look out for these five ETFs in 2016, and learn why investors should closely watch how the Federal Reserve moves heading into the new year.
  6. Investing Basics

    The Importance of Commodity Pricing in Understanding Inflation

    Commodity prices are believed to be a leading indicator of inflation, but does it always hold?
  7. Economics

    India: Why it Might Pay to Be Bullish Right Now

    Many investors are bullish on India for all the right reasons. Does it present an investing opportunity?
  8. Stock Analysis

    Analyzing Altria's Return on Equity (ROE) (MO)

    Learn about Altria Group's return on equity (ROE) and analyze net profit margin, asset turnover and financial leverage to determine what is causing its high ROE.
  9. Investing Basics

    Building My Portfolio with BlackRock ETFs and Mutual Funds (ITOT, IXUS)

    Find out how to construct the ideal investment portfolio utilizing BlackRock's tools, resources and its popular low-cost exchange-traded funds (ETFs).
  10. Stock Analysis

    The Top 5 Small Cap Gold Stocks for 2016 (KGC, SBGL)

    Learn about the factors that led to gold's underperformance, factors that may lead a gold rally and five micro-cap gold stocks to consider.
RELATED FAQS
  1. Which mutual funds made money in 2008?

    Out of the 2,800 mutual funds that Morningstar, Inc., the leading provider of independent investment research in North America, ... Read Full Answer >>
  2. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  3. Do ETFs pay capital gains?

    Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering ... Read Full Answer >>
  4. How do real estate hedge funds work?

    A hedge fund is a type of investment vehicle and business structure that aggregates capital from multiple investors and invests ... Read Full Answer >>
  5. Are Vanguard ETFs commission-free?

    While some Vanguard exchange-traded funds (ETFs) are available commission-free from third-party brokers, a large portion ... Read Full Answer >>
  6. Do Vanguard ETFs require a minimum investment?

    Vanguard completely waives any U.S. dollar minimum amounts to buy its exchange-traded funds (ETFs), and the minimum ETF investment ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center