Friday , 18 August 2017


Invested in Gold Miners? If So, Now May Be Time to Pull the Plug and Exit! Here's Why

Do not expect the gold mining sector to go up as a whole. Do not expect gold miners to leverage the gold price. The stock price appreciation will all depend upon the individual stock’s prospects and management competence, as in how the general market rates other investment vehicles as a whole. [Let me explain.] Words: 687

So says Marco G. (www.goombarhsedge.blogspot.com/) in edited excerpts from his article “Exit Gold Miners” as posted on www.seekingalpha.com* which Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!) and www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) has edited ([ ]), abridged (…) and reformatted (some sub-titles and bold/italics emphases) below for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.

Marco goes on to say, in part:

If you are invested in a gold miner, you may have taken some punishment possibly over the last year, and it may now be time to pull the plug and exit. Yes, in recovery from the 2008 turmoil, 2009 provided a great year of gains for the gold miners. The gains continued in 2010, with growth throughout that year. Then in 2011, with the economic uncertainty, the Middle-Eastern Spring and the antics of PIIGS in Europe, the price of gold reached new highs of $1,900 USD a troy ounce, yet the gold miners struggled. This is depicted in the two charts following:

(Click charts to expand)

The price of gold for the last three years in the above chart shows continued appreciation until a peak in September of 2011. Since then the gold price has been showing declining highs and declining interest.

The chart following shows the GDX ETF of large-cap gold miners.

The chart of the GDX miners above for the last three years shows the price appreciation in 2009 and 2011. Then in 2011, there was much volatility in sharp movements upward and downward. There were many opinions expressed as to why the miners were not showing price gains while the price of gold was still appreciating.

Who in the world is currently reading this article along with you? Click here

Whether the reasons were that the higher gold prices was not translating into profits, or that costs are also increasing or that the miner was encountering mining geological issues, the precious metals investor needs to wake up from the dogma of gold prices moving up forever and take action. Do not assume those gold mining equities as a whole will continue to rise, paralleling or leveraging the rise in the price of gold.

The interpretation of the above charts and the gold miners’ performances is telling me not to expect further gains for the group as a whole. There is now a coming (or already started) shaking out of the pack or differentiation of miners, where the ones that perform well will be rewarded and the ones that under-perform will be punished.

Witness the punishment that the market is meting out to Kinross Gold (KGC) for over-rating the potential in the $7 Billion Redback acquisition, and where it is now writing down the material goodwill for the buy-out in 2010. Kinross dropped 21% or $3 Billion in market cap on that announcement.

This is not unusual and just similar to the regular main stock markets where the growing companies that execute on their business plans go upward in price, and the dogs are penalized severely. This should be interpreted by you the precious metals investor, as a maturity in the precious metals sector, and you should be positioning yourself accordingly.

As to what good gold mining stocks one should be picking up, well it all depends upon the individual stock now, and the stock’s prospects for growth and the stock’s management being able to execute on growth plans.

Do not expect the sector to go up as a whole. Do not expect gold miners to leverage the gold price. The stock price appreciation will all depend upon the individual stock’s prospects and management competence, as in how the general market rates other investment vehicles as a whole.

*http://seekingalpha.com/article/361991-exit-gold-miners?source=email_macro_view&ifp=0

Why spend time surfing the internet looking for informative and well-written articles when we do it for you. We assess hundreds of articles every day, identify the best and then post edited excerpts of them to provide you with a fast and easy read. Sign-up for Automatic Receipt of Articles in your Inbox and follow us on FACEBOOK | and/or TWITTER so as not to miss any of the best financial articles on the internet.

Related Articles:

1. Get Positioned: “Gold Rush” Will Cause Gold Stocks to SOAR – Here’s Why

buy-gold

Whatever their reasons, the number of investors wanting exposure to gold is increasing. Many who ignored it a decade ago are now buying. Those who started buying, say, five years ago, continue purchasing it today in spite of paying twice what they paid then. Slowly but surely, it’s becoming more important to more people…but what happens when it becomes a must-own asset to a substantial majority instead of a small minority? Sure, the price will rise, probably parabolically, but putting aside speculation on the price of gold for now, have you thought about what happens if you have trouble finding any actual, physical gold to buy? [Let’s explore that possibility and what that would mean for gold stocks in such an eventuality.] Words: 870

2. How Inflationary and Deflationary Outcomes Might Affect Your Bullion and Mining Shares

how-to-value-and-invest-in-gold

Whilst we as staunch Austrians would prefer less liquidity provision and more allowance for markets to naturally self-correct and deleverage… we suspect that as markets try to self-correct, the authorities generally will be forced to print more and more [as] it is the easiest course for them to take and the typically all too human option…As such we look once more at how inflationary and deflationary outcomes might affect precious metal investors. Words: 1323

3. Goldrunner: Gold, Silver and HUI Index to Bounce Back to Major Highs by May 2012

bull

With the present major correction in gold, silver and the mining sector it is important to look at the big picture and see what the charts are saying from a technical fractal relationship with what happened back in 1979 when the last truely major bull run occurred. To date the situation is, frankly, no different than it was back then unfolding just as it should. As a result we can expect MAJOR upward price action in physical gold and silver and in their mining (producers, developers, explorers and royalty streamers alike) in the next few months on their way to their respective parabolic peaks in the years ahead. Read on. Words: 1604

4. Is it Time to Load Up on Gold Stocks?

bull

By almost any measure, gold stocks are undervalued but should we load up? Gold mining companies are earning record margins. Stock prices, however, have not responded in similar fashion but when the broader investing community begins to take notice, investors will snap up these highly profitable stocks and push prices higher. The “catch up” in gold stocks could be tremendous but the question, of course, is timing. We don’t know when gold stocks will begin to catch up and the data don’t suggest they must rise right now or that they’ve hit bottom so should we load up just now? Words: 590

5. Is It Time to Nibble at Gold Miner Stocks?

gold-bars-india

The behavior of the stocks of the various gold miners in recent times warrants special attention. Let’s take a look at the GDX:GLD ratio, the Gold Miners Bullish Index and the volatility of the currencies and stock market indices of the emerging markets where most of these mines are located and determine what they suggest as to what we could well expect in the performance of such stocks in the months ahead. Words: 585

6. Jeff Nielson: What to Look for When Considering Which Gold Mining Companies to Buy

precious-metals

While investing in gold mining companies is not quite as simple as novices to this sector might at first conclude, neither is it so overwhelmingly complicated as to make these companies inaccessible to individual, retail investors. Below are a number of things to look for when considering an investment in such companies. Words: 2745

7. Gold Stocks: Get Ready, Get Set, GO!

golden dollar

Both gold and silver continue to trade well below their inflation-adjusted highs in nominal terms, and the market is now beginning to acknowledge the profit potential that precious metals equities offer at today’s bullion prices. We believe the equities will offer more upside than the bullion over time. Many of the smaller names are well priced and have momentum behind them. The prospects for gold stocks look extremely bright [for very good reasons. Let us explain.] Words: 2250

8. The Five “M’s” for Picking Gold Mining Stocks

With gold miners, in general, so attractively valued relative to the gold bullion price, the question becomes which stocks are the most compelling and have the best leverage to robust precious metals prices…In order to find the diamonds in the rough, I use what I call “The Five M’s” for mining stocks… Market cap, Management, Money, Minerals and Mine life cycle. [Let me explain each .] Words: 1146

9. Here’s How to Value a Junior Miner’s Gold in the Ground

At any given time, we know the international spot price for an ounce of refined gold but what about the gold an exploration or mining company has in the ground – how do we value that? [We have the answer. Read on.] Words: 833

10. It’s Not Time to Buy the Gold Miners – Yet

The GDX has declined over 10% on a closing basis [since the end of May and] late last week broke the major support zone when it closed below 52.50. That is not good news for the gold mining bulls, but given the current dynamics of price and volume action in GDX, a bounce is due. [Let me show you why.] Words: 850