A number of people I know have sworn off gold shares after their consistently mediocre performance while gold has risen 50%.
Their reasoning goes along the following lines:
Have a look at the Dow soaring on Friday night while gold and gold shares got smashed. So gold shares should be hit here Monday, as they will be trated like gold assets leveraged to the gold price.
Now imagine if on Monday night the Dow gives up all of Friday's gains and gold recovers all of Friday's losses.
Will my gold shares recover all of their losses. Of course not. They'll be treated like general equities and sold down with the rest of the market.
Gold shares are just a lose lose situation. If the market goes up and gold falls then gold shares fall because the gold price has fallen. But if the market goes down and gold rises then gold shares participate as equities in the general market sell off.
It's just about impossible to win consistently in gold shares. They must be the worst and most illogical investment around.
