Questor share tip: Drilling polishes up Cluff Gold's Ivory Coast project This followed some upbeat production numbers from Cluff's Kalsaka mine in Burkina Faso, released last week. Production at the mine in 2011 beat guidance, with 71,505 ounces mined, compared with the expected 70,000 ounces. The company was strongly cash-generative last year and it had a year-end closing cash balance of $28.9m (£18.7m) and no debt. The entire gold equity complex has underperformed significantly over the past year, despite the gold price hitting record highs. The proliferation of exchange-traded funds (ETFs) is likely to be the cause of this underperformance because they allow investors to play the gold price without any operational risk. Miners have been facing costs pressure and there are exploration and political risks that investors do not get with an ETF. However, the main benefits of gold equities over ETFs is the upside risk from exploration success. This gives extra leverage to the gold price that an ETF does not have. This week, broker Nomura issued an upbeat sector report on gold, saying it was initiating coverage of the sector with a "bullish rating." "A cash build in the producers should drive growth, spur M&A and push dividends higher," Nomura said. This improving outlook has yet to be priced into gold equities, which are trading at historical lows in terms of valuation, offering an attractive entry point given current market instability. We see light at the end of the tunnel for gold equity investors. Trading on a 2012 earnings multiple of 15.9 times, the shares were first recommended at 62.3p on February 14, 2010, and they are up 38pc compared with a FTSE 100 up 11pc. They have been tipped as high as 104½p and they are now 18pc below this level. Of the six analysts in the City that cover the shares and are monitored by Bloomberg, all have buy rating with an average price target of 128½p.