The very long term relationship between the gold miners and the price of bullion has not been one of perfect price correlation. This is because the producers unlike bullion have “issues” such as exploration risk, political risk, environmental risk and cost risk. However the producers under the right conditions can be a leveraged way to trade in and out of the precious metals complex.
During the early stages of gold’s secular advance (2000 through 2003) the gold miners outperformed the price of bullion. In the mid stages of the secular advance (2004 through 2008) the price of bullion outperformed the gold miners. Now we seem to be getting into the mature stages of gold’s secular advance and there is growing technical evidence via shorter term spreads that the gold miners will once again return to out perform.