logo
Sign in or Register

Already a member?

Sign in

Or sign in with your account on:

Not a member yet?

Register
    

 

Equities – Your destination to connect with the growth investment community.

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


Liked What You Read? Join Equities.com as a contributor and get eyeballs on your content FOR FREE!

Results for gg
IH News Desk
19 Apr 15 05:04:16
$AMZN Opinions Updated Sunday, April 19, 2015 07:10:44 AM $CERN $GG $SPG $XLK http://t.co/r9QjyQNngj
PolgarStocks
19 Apr 15 03:27:09
$SLB Stock Forum Updated Sunday, April 19, 2015 06:06:56 AM $HJOE $KMI $XLV $GG http://t.co/6hjkwTDdjJ
PolgarStocks
19 Apr 15 03:27:07
$GG Investor Opinions Updated Sunday, April 19, 2015 06:06:56 AM $PM $GLD $GRCU $GCI http://t.co/Xo8GRu49oB
Langan Stocks
19 Apr 15 02:25:11
$PG Percent Change Updated Sunday, April 19, 2015 05:03:09 AM $GG $CENX $FXI $SBUX http://t.co/BhehFqVn6c
Rosner Stocks
19 Apr 15 01:25:22
$SPG Financials Updated Sunday, April 19, 2015 03:59:23 AM $SMN $OIH $FB $GG http://t.co/KVyHYmdEb2
PolgarStocks
19 Apr 15 00:25:20
$PPCH Stock Message Board Updated Sunday, April 19, 2015 03:06:56 AM $IWM $GG $FCX $EWJ http://t.co/eXD8NGcwXq
Langan Stocks
19 Apr 15 00:23:37
$UUP Short Sales Updated Sunday, April 19, 2015 03:03:10 AM $GG $IWM $WMT $TSLA http://t.co/QgmTNCCCQg
Rosner Stocks
18 Apr 15 22:23:07
$DEPO Percent Change Updated Saturday, April 18, 2015 12:59:22 PM $AUMN $IWM $VDSI $GG http://t.co/R2mlXGlOhZ
broten sherman
18 Apr 15 21:43:41
☯Gain Followers ☯RT This ☯MUST FOLLOW ME I FOLLOW BACK ☯Follow everyone who rts ☯Gain #retweet #myfirsttweet #follow $gg&
PolgarStocks
18 Apr 15 21:23:43
$GG Opinions Updated Saturday, April 18, 2015 12:06:58 PM $XLK $EWG $VXX $XLK http://t.co/jfmqTbxdsE
Langan Stocks
18 Apr 15 18:19:48
$ACT Opinions Updated Saturday, April 18, 2015 9:03:07 PM $MINE $MMM $GG $PMCB http://t.co/mT78HwaPPT
SmallCaps
18 Apr 15 18:17:24
http://t.co/Fv2ZjhWhEH <- Want to make $600,00 In One Year Trading? Check out how this guy did it! $AAVL $GG $TGT
IH News Desk
18 Apr 15 15:51:30
$GG News Updated Saturday, April 18, 2015 6:11:15 PM $RUSL $GWPH $MYEC $XLV http://t.co/3NjzChGY4f
Rosner Stocks
18 Apr 15 15:16:36
$IYT Financials Updated Saturday, April 18, 2015 5:59:26 PM $GERN $GG $INTC $PBR http://t.co/eLFRjxiH3Z
Langan Stocks
18 Apr 15 14:16:14
$UNH Company Info Updated Saturday, April 18, 2015 5:03:20 PM $TKMR $GG $CNC $GMCR http://t.co/yFBXZXQlqU
IH News Desk
18 Apr 15 13:50:10
$SDOW Financials Updated Saturday, April 18, 2015 4:11:14 PM $MRK $CNC $PFE $GG http://t.co/BNYuDdmbL7
SmallCaps
18 Apr 15 13:47:40
http://t.co/Fv2ZjhWhEH <- Want to make $600,00 In One Year Trading? Check out how this guy did it! $AAVL $GG $TGT
Langan Stocks
18 Apr 15 12:13:07
$GG Financials Updated Saturday, April 18, 2015 3:03:21 PM $DIS $VTI $DGAZ $TKMR http://t.co/oHSchmqbIE
PolgarStocks
18 Apr 15 12:13:03
$GG Percent Change Updated Saturday, April 18, 2015 3:07:18 PM $V $NGCG $BABA $CNET http://t.co/8A0LSKa7BN
Rosner Stocks
18 Apr 15 11:12:05
$IBB Short Sales Updated Saturday, April 18, 2015 1:59:24 PM $GG $ECIGD $CXDC $XLY http://t.co/Gtd5vgayvt
IH News Desk
18 Apr 15 10:47:37
$GLD Short Sales Updated Saturday, April 18, 2015 1:11:13 PM $GG $MON $SWKS $BX http://t.co/29A7JRKznv
Rosner Stocks
18 Apr 15 10:11:10
$SLB Filings Updated Saturday, April 18, 2015 12:59:23 PM $GG $IEF $V $SWN http://t.co/esfR33WHr3
PolgarStocks
18 Apr 15 09:10:18
$PSLV Stock Message Board Updated Saturday, April 18, 2015 11:07:16 AM $SNE $XLU $PBR $GG http://t.co/CxDIGat1MC
Rosner Stocks
18 Apr 15 09:10:11
$NTEK Reviews Updated Saturday, April 18, 2015 11:59:24 AM $GG $FEYE $XOM $XLY http://t.co/WtJV6R4MLk
Rosner Stocks
18 Apr 15 08:10:12
$EWZ Opinions Updated Saturday, April 18, 2015 10:59:24 AM $GDXJ $GG $NVAX $IBM http://t.co/0FdAW4gucu
Rosner Stocks
18 Apr 15 07:08:45
$TSLA Last Price Updated Saturday, April 18, 2015 09:59:24 AM $BIIB $FEYE $GG $QCOM http://t.co/fy9JKSuEsk
PolgarStocks
18 Apr 15 07:08:36
$BTU Reviews Updated Saturday, April 18, 2015 09:07:15 AM $IRDM $VTI $GG $MTL http://t.co/qozwpVZ42I
IH News Desk
18 Apr 15 06:44:05
$GG Stock Price Updated Saturday, April 18, 2015 09:11:13 AM $XLE $PJET $SDOW $THCZ http://t.co/DvIrKbW19q
PolgarStocks
18 Apr 15 04:07:09
$GG Short Sales Updated Saturday, April 18, 2015 06:07:15 AM $SVXY $BORN $SVXY $CURE http://t.co/hfIGXug8Du
Rosner Stocks
18 Apr 15 03:05:36
$NBG Short Sales Updated Saturday, April 18, 2015 05:59:21 AM $GDX $GG $EWJ $TNA http://t.co/wbnmxFAdh2
PolgarStocks
18 Apr 15 03:05:36
$XLF Stock Message Board Updated Saturday, April 18, 2015 05:07:15 AM $GG $TAN $BX $CELG http://t.co/gVfS9cvVn8
PolgarStocks
18 Apr 15 03:05:35
$CELG Stock Message Board Updated Saturday, April 18, 2015 05:07:15 AM $UTX $XRT $GG $VZ http://t.co/eB80OicIL1
Langan Stocks
18 Apr 15 02:04:22
$SLB News Updated Saturday, April 18, 2015 04:03:19 AM $GG $MDCN $CAT $JCP http://t.co/kWOx7xwfbf
IH News Desk
18 Apr 15 00:39:12
$AXP Investor Opinions Updated Saturday, April 18, 2015 03:11:11 AM $SVMI $GG $UNH $BIIB http://t.co/qPRcgFNAnp
Langan Stocks
18 Apr 15 00:03:13
$GG Recent News Updated Saturday, April 18, 2015 02:03:18 AM $ACT $TKMR $UCO $TLT http://t.co/tq95Tg0gyu
Langan Stocks
18 Apr 15 00:03:12
$DGAZ Stock Forum Updated Saturday, April 18, 2015 02:03:18 AM $GG $COP $EWJ $ADMD http://t.co/fSKY0mOxn4
PolgarStocks
17 Apr 15 23:01:35
$SWN Short Sales Updated Saturday, April 18, 2015 01:07:15 AM $GG $UNG $VXX $CVS http://t.co/VSp5oAVrQz
Langan Stocks
17 Apr 15 22:01:09
$FB Stock Price Updated Friday, April 17, 2015 12:03:19 PM $SWN $GMCR $ZIOP $GG http://t.co/Jzyz78K6HG
Langan Stocks
17 Apr 15 22:01:07
$CAT Stock Forum Updated Friday, April 17, 2015 12:03:19 PM $ARIA $BIIB $GG $IYR http://t.co/eeBq854slR
PolgarStocks
17 Apr 15 20:12:28
$CNVR Prev Close Click Here: http://t.co/laPnwXbkhC Also See: $PGNT $GG $ITWR $FCTY ~
Rosner Stocks
17 Apr 15 20:00:13
$MRK Financials Updated Friday, April 17, 2015 9:59:26 PM $RSX $VZ $GG $HBI http://t.co/GIJnblIMh6
Rosner Stocks
17 Apr 15 20:00:09
$SMH Reviews Updated Friday, April 17, 2015 9:59:26 PM $EWH $PPCH $DIA $GG http://t.co/5m4fq8PqBr
leahanne
17 Apr 15 19:58:24
Volume Alert - GG 19.81 Goldcorp Inc $GG Hit a high today of 20.21 Closing the day 04/17/15 at 19.81 -0.04 -0. http://t.co/GsE7Y5NLRC
leahanne
17 Apr 15 19:58:02
$GG Volume Alert - GG Stock 19.81 Goldcorp Inc $GG Hit a high today of 20.21 Closing the day 04/17/15 at 19.81 -0. http://t.co/xShRoL0Vuz
IH News Desk
17 Apr 15 19:36:09
$GG Stock Message Board Updated Friday, April 17, 2015 10:11:17 PM $PPCH $RIGH $QLD $TPI http://t.co/LpJJObt8LI
IH News Desk
17 Apr 15 17:35:06
$DIA News Updated Friday, April 17, 2015 8:11:18 PM $CXDC $GG $CNC $TQQQ http://t.co/Ktexyuhi64
GThomasLackeyJr CMT
17 Apr 15 16:59:34
April 17, 2015 RS Movers http://t.co/xUC8t7o0XB $SPHB $IWC $KRE $MLPI $BJK $RHS $HFC $GSAT $SCCO $SWN $UBNT $EMN $CVX $BC $ILMN $WYNN $GG
Langan Stocks
17 Apr 15 16:56:09
$GG Investor Opinions Updated Friday, April 17, 2015 7:03:23 PM $KMI $MCP $MDCN $TLT http://t.co/QOMFzSKWGg
metherel bitton
17 Apr 15 13:40:39
RT @1047_ebditacram: 💥➊💥 #FOLLOWTRICK 💥➋💥 RETWEET 💥➌💥 FOLLOW ALL WHO RT 💥➍💥 #FOLLOWBACK 💥➎💥 GAIN TODAY #FOLLOWBACK #gameinsight $gg%
swensen colquett
17 Apr 15 13:38:25
RT @1047_ebditacram: 💥➊💥 #FOLLOWTRICK 💥➋💥 RETWEET 💥➌💥 FOLLOW ALL WHO RT 💥➍💥 #FOLLOWBACK 💥➎💥 GAIN TODAY #FOLLOWBACK #gameinsight $gg%
				
				
By  +Follow June 12, 2014 1:53PM
Share:

Comments

 

blog comments powered by Disqus

About us

Equities.com is the most advanced interactive online social ecosystem for the financial industry, serving as a resource center and next-generation communication platform that connects self-directed investors with public issuers, market experts, and professional service providers and vendors. Registered members can leverage our exclusive proprietary research tools such as the Small-Cap Stars, which outperformed 90% of all small-cap mutual funds, and robust do-it-yourself E.V.A. research reports. The Equities.com Issuer Dashboard is the ideal tool to communicate and manage investor awareness campaigns to the investment community, as well as to access valuable resources to help your company grow.

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