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Best assets of 2019; miners dominated

Kitco News

Editor's Note: 2020 is expected to be another year of significant uncertainty and turmoil. But the question is what asset will emerge the victor when the dust settles from the global trade war, Brexit, recession threats, negative bond yields. It’s a showdown of global proportions, so don’t miss all our exclusive coverage on how these factors could impact your 2020 investment decisions.

(Kitco News) 2019 was indeed a tumultuous year; from the rally in precious metals in the summer, to the propping up of equities by the Federal Reserve’s unofficial “QE4”, markets saw no shortage of action.

One asset class stood above them all. As a basket, gold miners outperformed all the other assets measured, which included broad U.S. equities, emerging markets equities, U.S. bonds, gold and silver bullion, and U.S. real estate.

The table below highlights the performances of each asset class. For consistency of comparison, ETFs were used as a proxy for each asset benchmark.

Large-cap gold miners, as represented by the VanEck Vectors Gold Miners ETF (GDX), narrowly outperformed small-cap gold miners (GDXJ). Historically, small-cap miners have typically outperformed their large-cap producer peers during periods of bull rallies in gold prices, but this year proved an exception.

Sean Boyd, CEO of Agnico Eagle, said that junior miners are still not seeing gold prices at the levels needed for investors to come in.

“I think the gold price is just not high enough to attract a lot of new money into the space, and I think as we’ve mentioned before here, we started to see more generalist money start to look at the bigger, higher quality gold miners a couple of years ago," Boyd told Kitco News.

Even then, junior miners vastly outperformed other asset classes this year. At a 40% year on year return, junior gold companies beat out the third best assets, (after large-cap gold miners), the S&P 500 and U.S. real estate investment trusts (REITs) by 9%. The chart below illustrates the performance comparisons over the course of the year.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.