Even with the recent fall-off, gold is up about 30% for the year. Yet the miners have been laggards. Consider that the Market Vectors Gold Miners ETF (NYSE:GDX) is up about 2.50%.
Why the disconnect? There are several reasons. First of all, there are continuing concerns about escalating costs, political risks and reserves. But perhaps the biggest issue is that generally all equities fall when there is a correction – even if a group has strong prospects.
Interestingly enough, the relatively cheap valuations in the mining sector could spur mergers & acquisitions (M&As). For example, on Monday AuRico Gold (NYSE:AUQ) agreed to pay $1.5 billion to buy Northgate Minerals (AMEX: NXG) at 14.7 times EBITDA. According to Bloomberg, it’s the cheapest deal since 2004. Read More at Forbes
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