In one of my past articles, I launched a screaming buy on gold.
It was mid October 2015 and gold price was quoting around 1050 $: https://www.crottaz-finance.ch/blog/lor-et-les-mines-cest-parti-mon-goldy/ (sorry only in french but fell free to use an internet translator, it works well)
From that period, the gold rallied 280 $ for a performance of +26%, mines followed the move.
This year 2018 something strange happened.
A big de-correlation between gold price evolution and mines
I have no explanation, but probably gold mines are paper gold and may be people do not really understand the industry. For the moment the sector looks like dead but:
- The lack of volume is a good sign for a bottom, all the sellers have gone
- people are very often selling the shares doing nothing to buy the trendy shares (often overvalued)
Today the mines are quoted with a discount regarding the bullion:
and gold vs mines on a long run show again the de-correlation.
I still think gold is going to continue its rally and will break the resistance (it already broke the down trend) and gold companies are going to release nice profits.
On a technical side:
My thoughts and believes are .
- gold will continue to raise
- gold mines have the best leverage as ever to enjoy gold rally
- The producers are going to move first, then developers.
- The developers have a higher reward ahead and can make a multiple
- The producers are facing a decrease of their production and are going to be obliged to acquire high grade developer
- The political environment is also a very important point
graph issued this article: http://www.kitco.com/news/2018-02-22/Canada-Is-The-New-Top-Mining-Destination-Worldwide-Survey.html
In conclusion; Buy a developer, high grade, good quality, low AISC, in a safe juridiction.
As bargain, I have found a very cheap developer stock reaching all the above points and I keep at your disposal its name
If you would like to contact me to know more about this company, feel free: https://www.crottaz-finance.ch/contact/.
As disclaimer, I have to mention that gold shares can be very volatile.