With gold back above $1,550 and silver firming, today King World News interviewed Peter Schiff, President of Europacific Capital. When asked about the mining shares Schiff stated, “Well I think they are throwing these stocks away. I mean gold is less than $20 from a record high, yet if you look at the HUI (Gold Bugs Index) a 16% rally is what it would need just for the index to get back to where it was when gold was less than $20 higher than its current price. You look at some of the big gold mining companies, Barrick Gold is trading at 10 times forward earnings, 10 times earnings!
I remember when that stock was 30 to 40 times earnings, yet here we have a huge bull market in the price of gold and the PE’s have compressed to 10. I think anyone who believes there is a bubble in precious metals, all you have to do is look at the PE’s of these mining stocks and realize this isn’t a bubble at all. This is a huge wall of worry and everybody is more fearful than greedy in the gold mining market.” (more)
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