"The performance of equities against bullion is not looking pretty at the moment," says Evy Hambro, who heads the natural-resources team at BlackRock, one of the world's biggest asset managers....Explanations vary. Some analysts believe gold-company investors were scared off by January's dive by gold. Others believe the underperformance reflects skepticism about gold's recovery. Still others believe that gold shares have suffered because they're equities. Yet another explanation is that profits have been impacted by mines in strong-currency countries, in which gold has rose more modestly over the years. Gold ETFs have drained away investment demand that would normally go to gold-mining companies. The overall prognosis is fairly gloomy.
The FTSE Gold Mines Index, which tracks all gold mining companies with a "sustainable and attributable" gold production of at least 300,000 ounces a year and derive 51% or more of their revenue from mined gold, is in positive territory—but only just. It is up 0.4% from the start of January, in large part because of a strong rally in the past week or so. At the start of the month, it was down 4%.
Interestingly, none of the analysts interviewed used the word "undervalued." They must be skeptical of gold's recent performance too.