Another day, another Hard Assets Conference. One of the things that impressed out-of-towners who visited San Francisco for the Hard Assets Conference this past weekend was the throngs of holiday shoppers in the upscale stores around the conference venue.
"There certainly doesn't seem like there's an economic slowdown here," said one visitor from British Columbia.
What was apparent, however, was a sense of nagging unease among the investors who roamed through the conference exhibit hall and attended the talks given by newsletter publishers and mining stock promoters.
Financial dyspepsia now plagues many investors who bought gold stocks after last year's conference. Back then, any notion of hedging was anathema. After all, wasn't a gold stock investment a hedge itself?
Well, yes. And no.
Keep in mind that there are two words in the term "gold stocks." There's, of course, gold. But, as we've said many times, a gold stock isn't gold itself. This year, the correlation of gold stocks to bullion - as mirrored in the relationship between the Market Vectors Gold Miners ETF (AMEX: GDX) and the SPDR Gold Shares Trust (NYSE: GLD) - is 73%. A tight correlation it's not. The loose relationship is reflected in the 43% year-to-date loss racked up by the miners portfolio and the contemporaneous 3% slippage in the value of bullion trust.
