Gold Miner Stocks Provide Profits for Soros, Paulson

Tuesday, 12 Aug 2014 07:39 AM

By Dan Weil

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Gold miner stocks have soared this year, with the Market Vectors Gold Miners exchange-traded fund returning more than 25 percent.

Some big-time investors have benefited, including George Soros, chairman of Soros Fund Management, and John Paulson, president of Paulson & Co., The Wall Street Journal reports.

Gold stocks have outperformed the metal itself, which has risen 6.7 percent this year. Turmoil in the Middle East and Ukraine is helping to support gold now.

Editor’s Note:
5 Shocking Reasons the Dow Will Hit 60,000


In addition to rising gold prices, the miners can benefit from increasing production and cutting costs. And some investors tell The Journal that the stocks offer good value relative to historical levels.

"Gold companies just don't look as expensive as they did in previous years, . . . and you have a sentiment that is warming toward gold," Catherine Raw, a portfolio manager for BlackRock, tells the paper.

Soros Fund Management bought shares of Agnico Eagle Mines in the first quarter, and Paulson has owned a stake since 2011, according to The Journal. The stock has returned more than 47 percent so far this year.

Frank Holmes, CEO of U.S. Global Investors, is bullish on gold mining stocks too.

"Autumn is right around the corner, when the gold jewelry industry traditionally replenishes its stock. And with unrest in Ukraine and the Middle East continuing to drive the fear trade, as unfortunate as these events are, gold prices appear buoyant," he writes on Business Insider.

"This bodes well not only for investors in bullion but also mining companies, which will likely proceed with cost-cutting initiatives to maintain or expand margins."

However, not everyone is rushing out to buy gold or gold miner stocks.

"What gives me pause is that if the economy continues to show signs of strengthening, we could take another leg down in bullion prices," Mark Luschini, chief investment strategist at Janney Montgomery Scott, tells The Journal. "I'm not sure that gold miners, even though they've been punished a lot, couldn't fall further."

Editor’s Note: 5 Shocking Reasons the Dow Will Hit 60,000

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