Tuesday, December 28, 2010

Goldfails, 2010

In a year like 2010, when gold bullion hit new highs and the world finally began to wake up, smell the coffee and look at gold as a decent safehaven alternative, anyone who aimed some cash at the junior gold producers should have been on a good winner, right?

Well maybe yes but maybe not, because amongst the leveraged wins there's a group of gold producers with more than one thing in common:
1) They're small gold producers working in Latin America
2) They have a dubious track record of promising more than they can deliver
3)  Their share prices have all performed much worse this year then their main product, gold.
4) They all quote on the US exchanges
5) They've all, in their time, been pumped to death by brokerages and analysts who care more about the commissions and cheap shares thrown their company's ways than decent, unbiased analysis

So a warmly sarcastic round of applause as we ask these three 2010 goldfails to step forward: Give it up for Minefinders (MFN), Gammon Gold (GRS) and Jaguar Mining (JAG):

The chart shows the 2010 year-to-date performance of MFN, GRS and JAG compared to GLD, the gold ETf that serves as an accurate proxy to the metal. So Minefinders has managed to scrape out an "unchanged on the year" performance due to a late year rally, but it's still some 20% under an investment in gold, certainly not the type of performance that wins friends an influences people in junior mining. As for JAG and GRS, it just goes to show (once again) that you gringos will buy anything, especially if it's available on the NYSE and has the word "gold" in its corporate title.