RE: Question
I have speculated about the decoupling in the relationship of theprice of gold and the mining stocks. Here is my two cents worth:
1)Investors arenot convinced that the current price of gold will hold. I really find this hard to believe becausemost analysis are using $1,500.00/oz gold when projecting earnings. There are those who feel that gold is tradingin a bubble and will fall back to below $1,000.00 once the European and US debtissues are contained. I don’t adhere tothis theory. With countries printing moneyat this level inflation is coming.
2)The input costsof miners: fuel, labour, lower grades, remote locations etc are all negativelyeffecting profits. Investors have to getuse to these new costs, all the cheap gold has already being mined.
3)More investormoney has gone into gold bullion ETF’s (Billions of dollars) and this isdiluting money that would have otherwise gone into gold exploration and producers. Volumes are thinner now then they were 10-15years ago. It’s harder to get in and outof these stocks without adversely affecting the price. Because of this I see more and more investorsselling on great news just because the volume is there to get out. This pattern diminishes any opportunity for anexploration stock to move up even when things are going their way.
Just my observations, please comment as this can’t be all thereasons investors an not bullish on the mining stocks.
THE SEASONALITY FOR GOLD MINING STOCKS STARTS THIS MONTH AND LASTSUNTIL THE END OF DEC.-JAN. DON’T MISSOUT. BUY LOW SELL IN RETIREMENT!