S&P500, FTSE and Gold vs. Mining Stocks

The chart above compares the % price performance, since the official start of the 21st century of:

• US : Standard and Poor’s 500 Index (S&P500)
• UK : Financial Times Stock Exchange Index (FTSE)
• Gold

with

• HUI (also known as the Gold Bugs Index), which is an index comprising 16 major gold and silver mining companies.

As you can see, the major markets have essentially been flat over the last few years while gold has more than doubled.

However, gold mining companies have risen to a peak of 838% in this period. This is Acamar’s basic principle: if investing in gold makes sense, then investing in mining companies can provide substantial leverage to any increase in the price of gold.

Junior mining companies can provide even more spectacular returns than major mining companies as you move up the risk spectrum, a recent example being Aurelian Resources. The price moved from less than $ 1 to over $ 30 (2,900%) in six months, based on successful drilling results.