Amazed at what has transpired, the producers are scrambling to generate any sort of interest in their stocks. “We are seeing ever increasing inclusion of ounces into mine plans where the degree of confidence associated with their location and existence is lower than previous consideration,” [CIBC World Markets analyst Barry] Cooper noted. “In many cases, the mine plans are now incorporating ounces that have not even made it to an inferred category let alone the usual required measured and indicated classification.”Mr. Cooper himself believes that the stocks will eventually bounce back because the metrics he uses definitely say they're cheap.
For that reason, Mr. Cooper worries that net asset value could become less useful as a valuation metric, because no one can really trust the number.
It is an odd state of affairs. Gold stocks did much better than gold itself in the early stages of gold's bull market: from 2001 to 2007. Needless to say, the crisis of '08 wrecked the gold stocks, pushing them down much farther than gold itself. Since then, there have been times when the producers have outperformed gold but there have also been times, like now, when they've underperformed.
Since the '08 crisis, junior exploration issues with real deposits have done much better than the majors, although the mini-mania came to an end late last fall.