NCM 0.00% $32.26 newcrest mining limited

+ gold: $usd / $a. metal /mining/explorers +

  1. 22,691 Posts.
    Someone suggested that as the $A rises with the gold price, there is little if anything left for the Investor.

    Obviously, an investor needs to decide if an investment in gold/goldshares is for him. Gold/goldshares are used as insurance against certain catastrophic events as well.

    I think one needs to make a distinction between the metal gold, gold mining stocks and gold exploration stocks.

    As to the latter, the smaller ones have not benefitted as yet but should do IMHO, if the POG rises much higher.

    Of all these catagories the larger exploration stocks are my preference. These expand their gold assets over time and if successful doing so, normally increase the share price in $A faster than the price of Gold in $A.

    The overall price of 6 explorers (5 Canadians) has increased by 22% in $A since Aug. 9.

    During that time, gold increased by 9.75% in USD and 9.2% in $A.

    The reason is that good explorers are dynamic, when they increase their resources significantly or do a BFS (Bankable feasibility Study), then the increasing value of these assets must be converted into increased share prices even if the USD did not change over time.

    Taking it a stage further, if the gold price is $440 and rises 13.6% to $500, then the share price of these explorers should rise say twice or say 30%, right?

    Wrong. At a certain point, Investment demand rises strongly and there will be heavy competition for these somewhat rare exploration stocks at these levels.

    One of my stocks is $CAN. 9.25. At $US500/ounce, I would want at least $CAN14. So, in $A it could rise some 50% while the USD price rose 13.6%.

    And that is the reason, I invested. I don't hold the metal gold at present.

    One can't always predict how gold will move over time, hence the events described cannot be replicated.


    Gerry
    Readers, please do your own research and you decide if and when to buy, hold or sell any stocks.
 
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