Spot bullion prices have risen more than 25 percent since the end of June and more than 32 percent so far this year, as the specter of sovereign debt defaults and cracks in an already fragile world economy have driven investors to load up on the safe haven metal.
Spot gold XAU= touched a record high of C$1,877 an ounce on Friday after weak U.S. economic data spooked investors and led to a renewed flight to safety.
That suggests that the precious metal in ripe for a brief retreat, the chief executive of Goldcorp said on Friday.
Despite the surge in the price of gold, shares of the world's largest gold miners have lagged. The ARCA Gold Bugs Index .HUI, whose components include some of the world's top gold miners, is up just 2.6 percent year-to-date.
Operational issues, higher costs and production shortfalls are partly to blame for the underperformance.
In addition, many analysts say the rise of gold ETFs - exchange-traded funds that invest directly in the precious metal - have given investors an attractive alternative that still offers direct exposure to the price of gold.
Jeannes says gold equities have certain characteristics that make them more attractive than either physical gold, or ETFs over the long run.
"Perhaps most importantly, we can grow," said Jeannes. "You can see Goldcorp growing 60 percent over the next few years. An ETF or a gold bar in your vault can't grow, so if we look at the relative investments over the long term, a well-run gold company should outperform physical metal over the long term." ($1= $0.99 Canadian) (Reporting by Euan Rocha; editing by Frank McGurty)
Read more at http://www.reuters.com/article/2011/08/19/goldcorp-idUSN1E77I13820110819
