Nov. 6 (Bloomberg) -- Gold stocks are near their most expensive level relative to the price of bullion in 14 months, a sign that they may start to underperform the metal, according to WJB Capital Group Inc.

Gold traded at 11.5 times the level of the Philadelphia Stock Exchange Gold and Silver Index in October 2008, the most ever, as the financial crisis caused by Lehman Brothers Holdings Inc.’s bankruptcy sparked a stock market retreat and spurred investors to buy bullion as a haven. The gap has since narrowed as the mining index more than doubled to catch up with the metal’s gain, beating gold’s 48 percent advance.

The ratio, which never surpassed 6.4 from 1984 until September 2008, dropped to less than 6 in September and was 6.3 today. Its return to the level prior to Lehman’s bankruptcy signals that bullion is likely to begin outperforming its producers, said John Roque, managing director in technical analysis at WJB in New York.

“Quite simply the chart suggests gold should do better than gold equities,” Roque said. “It doesn’t mean the stocks won’t perform, but they will likely do less well relative to the metal.” Technical analysts make predictions based on price and volume charts.

Gold futures rose for a fourth straight session yesterday on speculation that the Federal Reserve will trail other central banks in raising interest rates, driving the dollar down and boosting the appeal of the metal. Bullion futures for December delivery rose $2, or 0.2 percent, to $1,089.30 an ounce on the Comex division of the New York Mercantile Exchange.

Gold may outperform mining stocks to a greater degree than it did in the past because the creation of exchange-traded funds is allowing investors to wager directly on the metal’s price without needing to buy mining stocks, Roque said.

To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net.

Last Updated: November 6, 2009 12:40 EST