INVESTMENT IN GOLD STOCKS
What returns to expect in Gold Investments?
Gold has steadily been bringing average returns of up to 18% per annum in the past decade although it is now headed for its first yearly loss since the year 2000. The prices of gold have equally fallen over $450 per ounce since January, bringing a 27% decline in a period of less than twelve months.
The gold market is therefore suffering due to the economic recovery in the US. An improvement in the economy exerts a downward pressure on the prices of gold. Other factors that affect gold prices include surging equity values, low inflation rates and a bearish commodity sentiment.
With all the above noted, it shouldn’t be viewed as a business flaw for one to invest a small portion of his income in the gold business. Gold is ‘naturally’ insulated from the ever sky-rocketing prices and investment in it is a very good way of fighting inflation.
What does putting your money in gold stocks mean?
Putting your money in Gold stocks means paying people to physically pull the precious metal from beneath the ground-BuyCongoGold.com Mines, processes and deals in gold. Get a quotation today. Gold stocks have historically moved hand in hand with gold prices because miners earn from the sale of the mined gold. The last twelve months have registered a fall in gold stocks by 55%, which is nearly 30% above that of the bullion in the same span of time. This could have been attributed to harsh treatment of miners and the rising production costs that erode profitability.
With companies facing all these challenges, many are opting out of the gold mining investment. Investors at this moment are presented with the right opportunity of buying the right companies, something that is a once in lifetime opportunity.
Gold Miners and the steadily rising Gold Prices
Gold miners are provided with a great deal of stability owing to a strong floor of gold prices. Positive cash flows will definitely be registered by miners this year because the gold mining stocks performed well between January and February 2014. Although the outlook of stocks in gold mining have been improving since last year, it has been disappointing to investors.
The M&A activities in gold mining has also increased as Goldcorp tendered to acquire a Canadian gold miner, Osiko. With this trend, we are likely to see more deals in the sector throughout the year. This is owed to the fact that the prices of gold don’t have a noteworthy upside as the Federal bureau eases its purchases of bonds. Production will only be boosted by acquisitions in the mining sector.
Are stocks in gold Mining worth investing in following last year’s debacle?
We now ask ourselves a question, are stocks in gold mining worth investing in following last year’s debacle? The answer is, yes; because the prices of gold have a strong floor at the moment and miners have made considerable cuts in their costs. The sector is also likely to increase its M&A activities, making it to look attractive again.