I have had that conversation with several people lately and I tend to favor the actual gold not the miners who mine gold. In general if gold really moves higher it will leave most gold miners in the dust, similar to what oil did. The exception is if you have some insight in a small cap junior gold miner where they are really leveraged to gold prices. I have no such insight. Anyway I saw this discussion on trading gold versus gold stocks and the huge outperformance in gold over the last six months. He tries to make a trade out of it. I think it is relevant because I think it helps prove my thesis that if your bullish on gold it is better to own just gold.
http://marketsci.wordpress.com/2009/02/04/trading-strategy-gold-vs-gold-stocks/
First, a look at the ratio of gold (represented by the ETF GLD) over the gold sector (XAU) from 2005:
Over the last 4+ years, the two have traded in a fairly narrow range versus the other, but in mid-2008 the ratio exploded as investors embraced the “safe” (good for gold) and abandoned all things equity-related (bad for gold stocks).
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