“Gold companies used to trade at big premiums — not anymore,” said Will Smith, co-manager of the CQS Group’s City Natural Resources Trust. “The equities have great margins now. The generalist looking for earning momentum would have to look at the equities.”

Miners of precious metals are trading at their lowest share prices relative to profit in almost three years. The benchmark Philadelphia Gold & Silver Index of companies including Barrick Gold Corp., Newmont Mining Corp. and AngloGold Ashanti Ltd. (ANG) traded as low as 14 times earnings last month, from an average of about 27 times profit in the past five years.

Smith expects bullion prices will continue to rise in the long term until there is a return to interest rates above inflation and growth in developed economies, and a “credible solution” is found to the sovereign debt and deficit crisis.

“In the absence of a solution to one, or preferably all of those, we feel that gold has got a really important part to play,” he said.

A slump in uranium stocks, along with mining equities, has dragged the fund about 15 percent lower this year. Uranium has plunged since an earthquake and tsunami triggered a nuclear meltdown in Japan in March. Companies that mine the ore make up about 13 percent of the fund.

“Right now can you have a sensible debate about uranium? It’s still a bit early,” said Smith. “We don’t see that a great deal has changed on the demand side. New mines are going to require higher prices quite frankly.” – Bloomberg