Continued Strength of Gold Bodes Well for Miners

Brittney Barrett |

Economic uncertainty generally works in favor of gold, leading many investors to assume an end to the precious metal’s ascent with resolution of the deficit. That; however, has not been the case. Monday’s reports of a global economic cooling has kept gold resolute at its highs. The gold index has declined only minutely since the agreements on the debt ceiling as many investors remain unsure on the future of the U.S. and global economies.

After gold reached its all time high last week, several metals analysts pointed to a certain disparity within the sector. Gold prices have risen about $450 a troy ounce over the last year, with a massive, roughly one-third increase occurring in the last month exclusively. Up 8.5 percent last month, gold as a metal far surpassed the performance of many mining companies, presenting comparatively inexpensive opportunities to gain from the rising price of the precious metal.

An investment in gold at this point could still offer profit potential but with miners looking undervalued in comparison to gold prices, major margins could come more easily. The rise in demand has jacked up sales prices and miners will be the ones to gain in terms of earnings. Gold has been bullish for the past decade and many analysts and industry experts have predicted a continuation of that trend. Should that be the case, miners have a lot to gain. Some are anticipating gold prices as high as $2,500 within the next two or three years, boosting earnings and infusing surplus capital on balance sheets.

Essentially, the demand for gold continues to rise and right now the industry is struggling to supply it as fast as the market is growing.  Basic economic theory would indicate that means good things for the companies that produce it.

Among the companies currently vying for a piece of the booming gold industry is Samaranta Mining Co. (SAX.TSXV), which announced the commencement of a tightly spaced 501 line kilometer Magnetometer and Gamma Spectrometer survey on four separate blocks of their Guadalupe property in Antioquia, Colombia.

The survey is designed to help identify the structure and alteration of Samaranta’s properties in an effort to gain an understanding of the extent of the geological similarities to the Frontino Gold Mines on to the Guadalupe concessions. Frontino has been a successful mine, producing a total of 4.6 million ounces. Should Samaranta find their own geographically similar Guadalupe property ripe with gold as well, share prices could climb alongside the price of gold.

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

Companies

Symbol Name Price Change % Volume
CNLMU CB Pharma Acquisition Corp Unit 1 Com 1 Wt Exp & 1 n/a n/a n/a n/a

Comments

Emerging Growth

CMX Gold & Silver Corp.

CMX Gold & Silver Corp is an exploration stage company. The Company is engaged in the acquisition, exploration and development of silver and copper/gold properties in the USA.

Private Markets

WayBetter

The spark hit Jamie when he saw co-workers competing to lose weight. Instead of pizzas and subs, they were eating salads and jogging along the river. Some were sneakily leaving…

XY Find It

Founded by serial entrepreneur Arie Trouw, XY Findables follows a single guiding principle: customers should never lose anything important again. With over 50,000 users around the world, more than 100,000…