'Wow, nobody wants to buy us': Investors exit as gold prices surge

financialpost.com:

Two decades ago, rising gold prices launched a historic bull run in Canada’s gold mining sector. Now, bullion is popping to all-time highs again, but this time investors are fleeing gold miners’ stocks in droves.

Even gold exchange-traded funds, which use investors’ money to acquire physical stockpiles of bullion, are contracting as gold prices rise, which is precisely the opposite of what many analysts expected.

The disconnect ties into a broader trend in which the profile of the largest buyer of gold has shifted: investors are fleeing the gold industry, dumping gold mining stocks and redeeming gold ETFs, while central banks around the world, particularly in China, have dramatically increased annual bullion purchases during the past two years.

The result is that the price of gold is shattering record after record, currently trading at US$2,150 per ounce and up 32 per cent since November 2022, but gold mining stocks are being crushed.

“The sentiment in this space has never been lower,” said Shree Kargutkar, a senior portfolio manager at Sprott Asset Management LP of Canada in Toronto who focuses on precious metals mining companies.

The sentiment in this space has never been lower

The VanEck Gold Miners ETF, a basket of the largest gold mining companies in the world, has declined 17.5 per cent since May. In the same period, shares of Toronto-based Agnico Eagle Mines Ltd. have dropped 7.4 per cent, while those of Toronto-based Barrick Gold Corp. and Denver-based Newmont Corp., which operates five mines in Canada, have fallen 23 per cent and 30 per cent, respectively.

In 2023, the total number of ounces held by gold bullion ETFs declined 8.7 per cent to 85.6 million ounces from 93.8 million ounces.

Historically, gold buying