logo
Sign in or Register

Already a member?

Sign in

Or sign in with your account on:

Not a member yet?

Register
    

 


Are Gold Miners Worth Investing In?

By  +Follow June 12, 2014 1:53PM
Share:
Tickers Mentioned:

gold stocks buy now, best gold stocks, gold prices buying opportunity, is gold a good investmentGold mining stocks were hammered last year as gold prices fell almost 30%. Investments in gold fell as investors pulled money out of exchange traded funds. This was mainly due to the fact that the U.S. Federal Reserve indicated that it will start winding up its quantitative easing program. The Fed has already started easing its bond purchases this year, however, surprisingly gold and gold mining stocks have performed well. So are gold miners worth investing in after last year’s sharp decline?

Gold Mining Stocks Hammered

In 2013, gold mining stocks registered steep losses. Shares of Goldcorp (GG) , one of the biggest gold mining companies, tumbled almost 40%. Another major miner, Barrick Gold Corporation (ABX) fell nearly 50%. Newmont Mining Corporation  (NEM) also saw a 50% drop in its shares. The interesting thing is that the drop in gold mining stocks was significantly higher than those seen in gold itself. Gold fellaround 30% last year.

Gold and Fed

Gold prices fell in 2013, ending over a decade-long rally in the precious metal. The drop in gold was sparked by speculation that the Federal Reserve might start easing its bond purchase program, which is also known as quantitative easing.

The Fed first launched its quantitative easing program or QE shortly after the financial crisis of 2009. The first and second rounds of QE sparked a rally in gold. The third round of QE, which was announced in 2012, saw gold jump to an all-time high levels. However, in May 2013, the improving U.S. economy raised speculation that the Fed might start easing its bond purchases. The speculation was further fueled by comments from the then Fed Chairman Ben Bernanke.

This was enough to spark a sell-off in gold prices as investors pulled money out of ETFs.

Gold’s Surprisingly Strong Performance in Early 2014

The Fed began winding up its quantitative easing program in January this year. However, surprisingly, gold performed well in the first quarter of 2014. The precious metal was helped by the crisis in Ukraine, which boosted its safe-haven appeal. But, another major factor that helped gold was strong physical demand, especially in China.

The sharp decline in gold prices last year boosted physical demand for gold in China, which even overtook India as the world’s biggest consumer of gold. This factor has meant that gold now has a strong floor at around $1,200.

What This Means For Gold Mining Stocks

A strong floor for gold prices provides a great deal of stability to miners. In fact, miners are expected to generate positive cash flow this year. Not surprisingly, gold mining stocks performed well in the first two months of 2014. Their performance has since been disappointing; however, the outlook for gold mining stocks has certainly improved since last year.

This year we have also seen increased M&A activity in the gold mining sector. Earlier in the year, Goldcorp offered to acquire Canadian gold miner Osisko. Goldcorp had to eventually drop its bid for Osisko as the Canadian miner opted for a rival offer.  Another major deal that didn’t materialize in the end was the merger between Barrick Gold and Newmont Mining. The two companies had been discussing a merger earlier in the year; however, talks eventually fell apart.

It is likely that we will see more deals in the gold mining sector as the year progresses. This is because gold prices do not have significant upside as the Fed continues to ease its bond purchases. Any growth that miners will see will come from acquisitions that will boost production.

The big question then is whether after last year’s debacle are gold mining stocks worth investing in. Gold price has a strong floor now and miners have cut their costs. Add to this the fact that the sector could increase in M&A activity. Given these factors, the sector is certainly looking attractive again.

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


Signup for our daily newsletter and get our best articles emailed right to you!

Results for gg
StockenheimerSchmidt
7 Jul 15 01:11:50
Our Stock Pick On $PPCH Is Up 370% For Our Subscribers, Since Our Original Release At .02! Huge News: http://t.co/Ab9x726B1J $BORK $PAWS $GG
Alpha Maven Alerts
7 Jul 15 01:02:08
$GG active, relative volume: 15.58, 1H, 4:00 AM, #nyse
jim50
7 Jul 15 00:49:12
WFM Whole Foods Market, Inc. Volume http://t.co/h4W8FUCYB6 $WFM $GG $OUTR $PBMD #WFM #investing #finance
Emylers
7 Jul 15 00:47:20
TSLA Tesla Motors Inc. Day High http://t.co/4FrarCYsDs $TSLA $MOH $GG $GLD #TSLA #finance #stock
Jake13
7 Jul 15 00:45:45
RDSH Roadships Holdings, Inc. Bid http://t.co/hDRtLAZRAD $RDSH $AMD $GG $XSD #RDSH #invest #share
jim50
7 Jul 15 00:44:26
RGBP Regen BioPharma Inc. EOD Data http://t.co/W8JcaQx24o $RGBP $GG $CDE $FV #RGBP #invest #tradeideas
PolgarStocks
7 Jul 15 00:44:08
OIL iPath S&P GSCI Crude Oil Total Return Index ETN News http://t.co/3ojINhSR7A $OIL $EA $EEM $GG #OIL #share #pennystocks
IH NASDAQ OMX
7 Jul 15 00:44:04
PALL ETFS Physical Palladium Shares Chart http://t.co/H8weMdFPBB $PALL $GDXJ $CELG $GG #PALL #investing #investing
jim50
7 Jul 15 00:43:04
OUTR Outerwall Inc. Ask http://t.co/cekMfs3iUn $OUTR $BABA $ELLI $GG #OUTR #share #stockmarket
Investors Hangout
7 Jul 15 00:42:56
GS Goldman Sachs Group, Inc. Tick http://t.co/FlVzlGqWK9 $GS $XME $SIEMENS.IN $GG #GS #share #stockmarket
leahanne
7 Jul 15 00:42:50
OXY Occidental Petroleum Corp. P/E Ratio http://t.co/UoINCBRnq5 $OXY $HD $GG $EWZ #OXY #share #nasdaq
Emylers
7 Jul 15 00:42:40
KRE SPDR KBW Regional Banking Index ETF Ex-Div Date http://t.co/EE9gB2q9rZ $KRE $FNMA $EBAY $GG #KRE #investing #stocks
Emylers
7 Jul 15 00:42:40
JNK SPDR Barclays High Yield Bond ETF Last Trade http://t.co/jL5syNAvy0 $JNK $GG $PAYC $ABC #JNK #investing #share
PolgarStocks
7 Jul 15 00:42:21
LCI Lannett Co., Inc. Tick http://t.co/CPdH74pT3h $LCI $HA $GG $GLD #LCI #tradeideas #stock
leahanne
7 Jul 15 00:41:45
HYG iShares iBoxx High Yield Corporate Bond Fund Message Board Posts http://t.co/6JFj8OQNMq $HYG $XIV $RGBP $GG #HYG #stockmarket…
leahanne
7 Jul 15 00:41:45
GDX Market Vectors Gold Miners Day Low http://t.co/ybLI2OfDiS $GDX $GG $ADMD $XIV #GDX #share #stocksGE General Electric Co. Short…
leahanne
7 Jul 15 00:41:43
GG Goldcorp, Inc. Chart http://t.co/umTrX7OWUd $GG $BTU $DRYS $JNK #GG #finance #investingGILD Gilead Sciences, Inc. Yield…
leahanne
7 Jul 15 00:41:42
GDX Market Vectors Gold Miners Day Low http://t.co/KTPC20uvMp $GDX $GG $ADMD $XIV #GDX #share #stocksGE General Electric Co. Short…
jim50
7 Jul 15 00:41:15
GDX Market Vectors Gold Miners Day Low http://t.co/Za6l4UajFs $GDX $GG $ADMD $XIV #GDX #share #stocksGE General Electric Co. Short…
jim50
7 Jul 15 00:41:14
GDX Market Vectors Gold Miners Day Low http://t.co/CyBx8b0lNW $GDX $GG $ADMD $XIV #GDX #share #stocksGE General Electric Co. Short…
leahanne
7 Jul 15 00:41:13
GG Goldcorp, Inc. Chart http://t.co/TNQPPyymfz $GG $BTU $DRYS $JNK #GG #finance #investingGILD Gilead Sciences, Inc. Yield…
jim50
7 Jul 15 00:41:12
GDX Market Vectors Gold Miners Day Low http://t.co/spkJugPuuR $GDX $GG $ADMD $XIV #GDX #share #stocksGE General Electric Co. Short…
leahanne
7 Jul 15 00:41:12
GDX Market Vectors Gold Miners Day Low http://t.co/9sORvQRjgV $GDX $GG $ADMD $XIV #GDX #share #stocksGE General Electric Co. Short…
Rosner Stocks
7 Jul 15 00:41:11
GG Goldcorp, Inc. Chart http://t.co/G8r0VhybSo $GG $BTU $DRYS $JNK #GG #finance #investingGILD Gilead Sciences, Inc. Yield…
leahanne
7 Jul 15 00:41:09
GG Goldcorp, Inc. Chart http://t.co/CZtz1wQWzu $GG $BTU $DRYS $JNK #GG #finance #investingGILD Gilead Sciences, Inc. Yield…
Investors Hangout
7 Jul 15 00:41:06
GDX Market Vectors Gold Miners Day Low http://t.co/GgdY7B0r5K $GDX $GG $ADMD $XIV #GDX #share #stocksGE General Electric Co. Short…
PolgarStocks
7 Jul 15 00:41:06
GDX Market Vectors Gold Miners Day Low http://t.co/o7hbQvjJzl $GDX $GG $ADMD $XIV #GDX #share #stocksGE General Electric Co. Short…
Investors Hangout
7 Jul 15 00:41:05
GDX Market Vectors Gold Miners Day Low http://t.co/ziDQ5Nf73S $GDX $GG $ADMD $XIV #GDX #share #stocksGE General Electric Co. Short…
Emylers
7 Jul 15 00:40:40
GG Goldcorp, Inc. Chart http://t.co/FLnq1i7MXY $GG $BTU $DRYS $JNK #GG #finance #investingGILD Gilead Sciences, Inc. Yield…
Emylers
7 Jul 15 00:40:38
GG Goldcorp, Inc. Chart http://t.co/AK18NkiSho $GG $BTU $DRYS $JNK #GG #finance #investingGILD Gilead Sciences, Inc. Yield…
leahanne
7 Jul 15 00:40:31
GDX Market Vectors Gold Miners Day Low http://t.co/e9VO0Mm1cr $GDX $GG $ADMD $XIV #GDX #share #stocksGE General Electric Co. Short…
leahanne
7 Jul 15 00:40:30
GG Goldcorp, Inc. Chart http://t.co/ubF8oHWuzn $GG $BTU $DRYS $JNK #GG #finance #investingGILD Gilead Sciences, Inc. Yield…
leahanne
7 Jul 15 00:40:29
GG Goldcorp, Inc. Chart http://t.co/Tb76Nr5pAw $GG $BTU $DRYS $JNK #GG #finance #investing
Rosner Stocks
7 Jul 15 00:40:17
GG Goldcorp, Inc. Chart http://t.co/NcgIttQTSt $GG $BTU $DRYS $JNK #GG #finance #investingGILD Gilead Sciences, Inc. Yield…
Jake13
7 Jul 15 00:40:16
GDX Market Vectors Gold Miners Day Low http://t.co/lFTxQZajXr $GDX $GG $ADMD $XIV #GDX #share #stocksGE General Electric Co. Short…
Investors Hangout
7 Jul 15 00:40:15
GDX Market Vectors Gold Miners Day Low http://t.co/XqLwXVpush $GDX $GG $ADMD $XIV #GDX #share #stocksGE General Electric Co. Short…
Rosner Stocks
7 Jul 15 00:40:15
GG Goldcorp, Inc. Chart http://t.co/kstqxnNEGb $GG $BTU $DRYS $JNK #GG #finance #investingGILD Gilead Sciences, Inc. Yield…
PolgarStocks
7 Jul 15 00:40:14
GDX Market Vectors Gold Miners Day Low http://t.co/RMDbl28UGK $GDX $GG $ADMD $XIV #GDX #share #stocksGE General Electric Co. Short…
Investors Hangout
7 Jul 15 00:40:14
GDX Market Vectors Gold Miners Day Low http://t.co/iJ9hpTgSJS $GDX $GG $ADMD $XIV #GDX #share #stocksGE General Electric Co. Short…
jim50
7 Jul 15 00:40:13
GDX Market Vectors Gold Miners Day Low http://t.co/AYR8xoNeJn $GDX $GG $ADMD $XIV #GDX #share #stocksGE General Electric Co. Short…
PolgarStocks
7 Jul 15 00:40:13
GDX Market Vectors Gold Miners Day Low http://t.co/jQPB8rMAvR $GDX $GG $ADMD $XIV #GDX #share #stocksGE General Electric Co. Short…
Investors Hangout
7 Jul 15 00:40:12
GDX Market Vectors Gold Miners Day Low http://t.co/HvZ8xJWpna $GDX $GG $ADMD $XIV #GDX #share #stocksGE General Electric Co. Short…
Investors Hangout
7 Jul 15 00:40:11
GDX Market Vectors Gold Miners Day Low http://t.co/eahTW5omlh $GDX $GG $ADMD $XIV #GDX #share #stocks
Stock_Tracker
7 Jul 15 00:40:10
GDX Market Vectors Gold Miners Day Low http://t.co/hvUpgW2m1L $GDX $GG $ADMD $XIV #GDX #share #stocksGE General Electric Co. Short…
jim50
7 Jul 15 00:40:10
GDX Market Vectors Gold Miners Day Low http://t.co/lRrKedac1X $GDX $GG $ADMD $XIV #GDX #share #stocksGE General Electric Co. Short…
danrocks
7 Jul 15 00:40:09
GG Goldcorp, Inc. Chart http://t.co/5wmgdBsKYI $GG $BTU $DRYS $JNK #GG #finance #investingGILD Gilead Sciences, Inc. Yield…
Stock_Tracker
7 Jul 15 00:40:09
GDX Market Vectors Gold Miners Day Low http://t.co/ikdVf1sL7l $GDX $GG $ADMD $XIV #GDX #share #stocksGE General Electric Co. Short…
clayton
7 Jul 15 00:39:09
GG Goldcorp, Inc. E.P.S. http://t.co/4CYU12uPGB $GG $CDE $GDX $GPRO #GG #stock #pennystocks
leahanne
7 Jul 15 00:38:42
GG Goldcorp, Inc. Quotes http://t.co/UXDslEJ724 $GG $CDE $SKX $XLI #GG #invest #stocks
danrocks
7 Jul 15 00:38:39
FV First Trust Dorsey Wright Focus 5 ETF Ask http://t.co/ogYjnvVXar $FV $TRV $SLW $GG #FV #tradeideas #stocks
				
				
By  +Follow June 12, 2014 1:53PM
Share:

Comments

 

blog comments powered by Disqus

 

 Today's Must Reads

Microsegmentation: The Future of Cybersecurity?


How this Playboy Playmate Became a Better Stock Trader Than You

Long Term Rates Are On The Up…What’s Next?

The Modern Web: So Many Ways to Invest in Wireless Mobile Stocks

It's Time for the Rest of the Country to Legalize Weed

 

Do you expect a 10% correction by the end of 2015? in Equities.com Polls on LockerDome

About us

Equities.com is an advanced financial data portal and social network designed to connect self-directed investors with the world’s most innovative startup and small cap companies. Through our in-depth coverage of small cap markets, comprehensive research and stock valuation reports, state of the art issuer products, and world class events, Equities.com provides the social tools and insight that drive tomorrow’s investment relationships and opportunities.

Market Data powered by QuoteMedia.
Copyright © QuoteMedia. Data delayed 15 minutes unless otherwise indicated. Terms of Use.

Login or Register

LOG IN