The upside to gold stocks is that investors historically have received a 2-to-1 leverage by owning gold equities instead of the commodity. We believe that effective management can help miners gain more leverage over the metal for their shareholders.
The big surprise this morning was that the US jobs figures…surprised to the upside, and then some. Gold prices promptly fell by as much as $18 (all the way back down to $1,682) in the wake of the report that showed US unemployment falling to 7.7%.
Once again investors might be feeling antsy to invest in this enterprise. People looking for a successful investment in the gold sector might examine Richmont. It is quite possible that this enterprise will regain lustre in 2013, if not sooner.
As gold enters into a season of fundamental strength and what should be a powerful new upleg, there ought to be rekindled interest in gold stocks. In fact, if gold indeed rallies the gold-stock sector will likely see a much-more-powerful upleg than the metal.
The price of gold has been relatively subdued so far this year. Over the past three months, gold has been in a tight trading range between $1,540 and $1,640. However, several well-known hedge funds recently made large moves regarding the safe-haven asset.
The market of precious metals equities is not limited to the HUI or XAU. There are hundreds and hundreds of other companies out there. Moreover, it is very important to note that the large miners did not go parabolic in the late 1970s.
It only took eleven years, but in 2011 global gold-mine production has finally returned to pre-bull levels. With 2011’s volume expected to come in at around 88 million ounces, we’ll see a new all-time production high.