BlackRock says gold firms' poor dividends 'incomprehensible'
The well-documented divergence between the gold price and the share prices of gold producers is due to "a reluctance by companies to pass profits onto investors," Evy Hambro in charge of the BlackRock World Gold fund and the BlackRock World Mining fund tells City Wire.
'It’s really incomprehensible when you see their balance sheets at such strong levels, margins at record levels and limited opportunities to reinvest money into new production.’
‘Dividends are rising now but they started from such a low base and it will take a few years before they catch up. The gap is closing but you can’t give a prediction exactly of when.’
A further reason according according to Hambro – who manages €16 billion in assets – over and above the competition from new exchange traded gold funds for the disconnect is due to a "broad de-rating of equities as an asset class which saw the oil price outperform oil shares, copper outperform copper shares, and gold outperform gold shares".