A number of gold miners, including giants Barrick Gold Corp. (NYSE:ABX), Newmont Mining Corp. (NYSE:NEM), and Goldcorp Inc. (NYSE:GG) should perform strongly going forward, as valuations are historically cheap, and lag the upward movement of the price of gold.
A growing number of investors are increasingly excited about the possibilities for gold mining companies, as it's inevitable they attract more and more attention, which will increase investment, but could also draw those who don't understand the market. That could lead to a bubble sometime in the future, but it's nowhere near to that place now.
Higher gold prices are creating wider margins, which of course will lead to strong earnings for the gold miners, and the current quarter should be very strong for them.
Valuation for gold mining stocks have plummeted to their lowest levels in about 18 months, creating the powerful argument for a surge in the price of the gold mining sector.
The more important long term outlook is the underlying fundamentals, including inflation, weak economy, deficits and out-of-control government spending.
That isn't going to change any time in the near future, and the gold miners and investors in them will benefit as a result.
Some think it could be up to three years before investing in gold and gold stocks go mainstream, and that's a lot of time to make money before irrational investors enter the sector, if that proves to be the case.
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