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Can anyone give me fundamentals on gold mining companies? Do they move with the price of gold over time? What are the negatives and positives about being in gold mining. Currently, I'm in GG.
Gold mining stocks are underperforming gold by a solid amount. Heard a discussion today. It all started down hill for gold mining equity funds somewhere around 2004 when the GLD etf was formed and it made it easy for folks to buy shares in gold.
Gold mining stocks are underperforming gold by a solid amount
That is correct, gold has soared but the miners have not. I'm very heavy into FCX, which is more of a combined gold and copper play. I estimate FCX is approx 20%-25% below fair value, and it trades at a lower P/E and has a better dividend than most of the other gold stocks.
If you want something that follows the price of gold then GLD is your best choice. Gold mining stocks can decrease if their production weakens, even if gold prices hit record highs.
Read up on financial "bubbles". Dutch Tulips, Mississippi Company, etc.
Thanks for posting. I read some of the excerpts online but it talks about financials, tech, energy, mining and gold as being bubbles. So that includes FB, APPL, BAC, C ETC. Heck the whole stock market is a bubble. But I don't thinking mining isn't anymore of a risk than when people bought AAPL at $700 or FB when it listed. But commodities in the underlay can be risky.
Everything can, has, or will be a bubble. Look at a graph of the price of gold over the past several years and ask yourself this: we have been using gold for thousands of years, is there any reasonable justification that in just the past several years, the price has TRIPLED?
Personally, I think Gold is past peak. Only thing preventing it from crashing is the continued uncertainty about whether our federal government will become fiscally responsible. 75% of the current price of gold is tied to that.
As for Apple, it could be past peak as well, I'm not sure. It depends on how saturated the market is for iPhones, iPads, etc. and whether they will come out with newer products that people will keep buying. At some point, people who want fancy phones and such will have them and they will stop buying a new one every few months just to have a new phone that will not be much better than their previous one. Same thing occurred with just about every new technology. Look at RCA stock in the '20s when radios first became popular. They sold like crazy until everyone had one.
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