S&P Capital IQ Bullish on Gold Miners

It is no secret that shares of gold miners and the ETFs that track this group have been disappointments relative to gold futures. And it is not a secret that this scenario has played out for a long enough period of time that

. The bull case says there might be signs of gold miners and in a research note, S&P Capital IQ said it remains positive on gold's outlook for this year and 2013. S&P Capital IQ gave five reasons for its bullish outlook on the yellow metal. "First, given that the Federal Reserve is committed to keeping short-term interest rates at near zero through 2014, we see no opportunity cost for buying and holding gold anytime soon," S&P said in the note. "Second, despite higher gold prices, global mine production has been stagnant for over a decade. According to data compiled by Gold Fields Minerals Service, a U.K.-based metals consulting firm and publisher, global mine output in 2011 totaled 2,809 tons, up eight percent from 2,602 tons in 1999. We believe production will remain stagnant for the next several years, as old mines are becoming depleted and are not being replaced to the extent needed to significantly lift output." S&P also cited volatility among major global currencies and elevated concerns about "concerns over solvency of international sovereign debt. In our view, the threat of debt defaults increases the appeal of gold as a safe haven asset." In addition, rising money supply in the U.S. could be a catalyst to drive gold higher this year, S&P said. In terms of individual gold miners, S&P has a five-star rating on Barrick Gold

and four-star ratings on Newmont Mining

and Randgold Resources

. Those three stocks combine for about 30 percent of Market Vectors Gold Miners ETF

. With almost $8.1 billion in assets under management, GDX is the largest ETF tracking gold mining equities. GDX has struggled this year, falling almost 15 percent even as ETFs backed by physical gold have risen. The SPDR Gold shares

and the iShares Gold Trust

, the two largest gold ETFs, are each up about three percent year-to-date. Small-cap gold miners have been even worse than their large-cap counterparts. Year-to-date, the Market Vectors Junior Gold Miners ETF

has fallen almost 20 percent. GDXJ has some mid-cap exposure and some allocations to silver miners as well. The fund has nearly $2.3 billion in AUM. S&P did not include ratings for either ETF in the research note. For more on mining ETFs, click

.