If you want "bullion brawn", don't buy gold miners

I'm sent this link by reader Dave (ty man), an interesting report in Canada's Globe & Mail written by one Michael Bowman. Entitled Gold miners with bullion brawn, it's all about how much gold bullion production you get for your buck when buying into gold mining companies and producers. Twenty-two producers are covered, including all the tier 1 names you'd expect and also smaller, newer kids on the block such as B2Gold, San Gold, etc (read the thing for the full list).

The payoff comes when Bowman offers up a table that shows how much gold production you get for every $10,000 you invest in company shares right now and to get you in the picture, here's an extract from the report:

What did we find? 

For a $10,000 investment in Centerra Gold Inc., an investor would be picking up 3.77 ounces of bullion production, and a 2.28 per cent dividend. A $10,000 investment in Canada’s largest gold company, Barrick Gold Corp., would buy 2.33 ounces of production, and a 2.45 per cent dividend yield. With Goldcorp Inc., you are receiving less than an ounce of production. continues here.

As soon as I saw the list, I couldn't help noticing how poorly all these companies, including top-placed Centerra, come off against just buying gold or perhaps GLD, the gold bullion ETF. Right now, if you put $10k into those, you get 6.2 ounces of gold. This means that these mining companies have to justify their current share price (not to mention their growth potential in something other than their gold asset value, else they're going to lose even more ground against the thing they produce (in simple terms, gold will continue to beat the gold miners, the clear trend of the past year). And the way they do that is to make net profits, give dividends, get bigger etc. 

Rule One™ = Producing Miners Make A Profit. And by the looks of the above, the days of accepting a thin profit are also behind us.