Gold Stocks vs Gold – Choose Gold

Analyst, Author, and Owner of Kelsey's Gold Facts
April 22, 2024


The long-term underperformance of gold stocks compared to gold itself is clear and indisputable. A matter of remaining contention is whether or not beleaguered investors in the not-so-shiny metal stocks will ever recover from more than twenty years of disappointing and largely negative results. It isn’t just the poor relative performance, though; holding gold mining stocks has been a losing proposition in its own right.

Below is a chart which shows the relationship of the HUI (NYSE Gold Stock Index) relative to the price of gold…

HUI to Gold Ratio 1996-2023

In October 2000, both gold and gold-mining stocks had reached the nadir of a twenty-year decline from blowoff price peaks in 1980. For the next three years, gold stocks rose sharply and much higher relative to any particular influence from the gold price. After that, however, gold stocks began a two-decade slide in price performance relative to gold bullion.

This does not mean that gold stocks didn’t go up after 2003. What it means is that the outperformance of mining stocks relative to gold was over. For the past twenty years, gold stocks have struggled to match the performance of gold on the upside and declined much more on the downside. That is exactly the opposite for which investors had hoped. (see Gold vs. Gold Stocks – Just The Facts, Ma’am)

Over the five-year period from November 2003 to October 2008, the gold price rose from $389 to $730; an increase of forty-seven percent. During that same time frame, HUI (gold stocks) lost twenty-one percent, declining from 249 to 197. After that, both gold and gold stocks rose sharply into their respective peaks in August 2011. Gold stocks outperformed gold in the early stages of those three years but the ratio began declining again several months before the August peaks and continued after that.

In late 2015, after substantial declines in both gold stocks and gold, the mining shares were down eighty percent from their all-time highs, whereas gold was down by about forty-five percent. Over the next six months gold stocks outperformed gold by a ratio of 2-to-1. The brief six-month period of outperformance was followed by the past eight years of significant underperformance. The underperformance is so bad that gold stocks are currently down thirty percent since their peak in 2016, while gold is UP seventy-eight percent over that same time frame.


We are beginning to hear some analysts and mining company principals talk more openly about the disconnect between gold and gold mining stocks. It would be good for all of us if the marketers were less exuberant in their calls. Here are some facts for holders of gold stocks and would-be investors…

  1. Since 2000, the gold price has increased by 860% ($250 to $2400) vs. a gain of only 170% for gold stocks. (What makes this so much worse is that the numbers include the hugely favorable performance of gold stocks between 2000-03, when mining shares were up approximately 600% compared to a price increase of 56% for gold bullion.)
  2. Gold is up 78% ($1350 to $2400) vs. a LOSS for gold stocks (HUI) of -8% since July 2016.
  3. From their respective peaks in 2020, gold is up 17% ($2048 to $2400) and gold stocks (HUI) are DOWN -30%.

Price performance of gold stocks is like a marathon runner who continually loses ground to the competition, but occasionally runs really fast to catch up; never quite reaching his previous place, then falls further behind.

If you currently hold gold stocks and have benefitted from the latest sign of life/dead-cat bounce in share prices, sell them. Any outperformance is temporary and won’t last. If you want to own gold, then buy gold with the sales proceeds of your gold stocks. (also see Still Betting On Gold Stocks? and Gold Stocks Are Worse Than Gold

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED!


Kelsey Williams has more than forty years experience in the financial services industry, including fourteen years as a full-service financial planner. His website, Kelsey's Gold Facts, contains self-authored articles written for the purpose of educating and informing others about gold within a historical context. In addition to gold, he writes about inflation and the Federal Reserve.


Kelsey Williams is available for private consultations, public speaking, and interviews at [email protected]

The melting point of gold is 1337.33 K (1064.18 °C, 1947.52 °F).
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