Nick Barisheff Explains Gold Shares' Relative Underperformance

In a nutshell, the reason is gold benefits more during a crisis than gold shares. Mining companies are businesses and carry risks that gold itself doesn't. During a financial crisis, market participants become more sensitive to business risk regardless of the business. That's why gold shares plummeted in the Crash of '87 while gold itself was hardly affected; that's also why the HUI got clobbered far more than gold itself in the crisis of '08. One chart from his article shows the HUI losing all of its gains since the beginning of 2000 at the nadir of that crisis:




Given gold's long-term bull market, that was pretty tragic.