Declining supplies could be supportive of gold prices moving forward.
Chart courtesy of StockCharts.com
As reported in the Wall Street Journal, Chuck Jeannes—CEO of the world’s largest gold mining company, Goldcorp—is calling the top in gold production. In the article, Jeannes notes that declining supplies from the world’s gold producers would be “very positive” for gold over the long term.
Jeanne’s basic argument is that the low-hanging fruit has been picked, gold prospecting is becoming more difficult, and the industry will see consolidation moving forward.
ETF investors have two very different types of possible gold investments: gold miners or physical gold. While they might sound one and the same, gold miners are more volatile and relatively uncorrelated to gold prices.
Funds such as the iShares MSCI Global Gold Miners ETF (RING | B-99) and the Market Vectors Gold Miners ETF (GDX | B-67) invest in shares of the world’s largest gold miners. Investors looking for a portfolio of smaller gold miners might consider the Market Vectors Junior Gold Miners ETF (GDXJ | D-26).
In contrast, the iShares Gold Trust (IAU | A-100) and the SPDR Gold Shares ETF (GLD | A-100) track the spot price of gold by holding physical gold bullion in vaults.