via SeekingAlpha

Seeking Alpha writer Tom Iacono points out that gold miners have underperformed the metals for quite some time.

If gold miners did not pay out a robust dividend, as they had during the depression, then there would be no purpose in owning the stock. What will determine the price of a gold stock going forward is the P/E ratio, and probably the yields.

Prior to the devaluation in 1935, gold miners made terrible investments as their share prices had been crushed in the crash, whereas once they were the market darlings. (Prize mining is a good comparable in the contemporary era, with its high during the tech stock bubble, and now trades at mere pennies.) But even though they may not have had a great discovery on hand such as had been made 30 years prior to the onset of depression with Dome, they had costs that were a third or less and could pay out huge margins if they managed to get into production.

Gold mining stocks are now being devalued by inflation, if you care to divide the mining stock price by the gold price. But their internal rates of return, their margin over costs, will surge as short term interest rates have nowhere to go but down. Especially in Canada, where you have lots of listed gold mining producers.

You want to buy as many ouces as possible of production that you can with the money available. Good luck on being able to take delivery of your gold via the futures market, unless you pay cash at the bullion desk.

http://finance.yahoo.com/q/bc?s=PRZ.V+Basic+Chart&t=my

-F6