Gold has been the comeback story of the investment year to date. After falling for 4 consecutive years from $1895 in 2011, it bottomed in mid-December 2015 at $1050. Of course back then analysts were on TV predicting $6-700 gold within a year. That did not happen. At the time of writing gold sits comfortably around the $1340 price level.
What I find particularly interesting is that this is happening at a time when the S&P 500 is making new all time highs. Over the past 4 years, gold fell time and time again when markets went up and vice versa. That pattern now appears to be broken.
Given that gold is up $300 over the past 7 months (roughly 30%), the companies that make a living mining the yellow metal are up anywhere from 100-400%! Goldminers are a leveraged play on the price of gold. Meaning a 10% move in the price of gold can lead to a 30% move or more in the value of a gold mining stock.
The reason for this is quite simple. Many gold-miners operate with razor thin margins. When the price of their product spikes whilst their extraction costs remain the same, their profits … TO READ ON SUBSCRIBE AND BECOME A PATREON.