Shares of gold miners are surging today as high physical demand for the precious metal and yesterday’s Standard & Poor’s downgrade of Spain’s credit rating reignited European debt concerns. The downgrade was the third time in three years as plodding growth and teetering defaults threaten the health of banks. While there has been some resolution to the Greek debt crisis there are ongoing factors across Western Europe that are likely to keep gold high.
“Gold remains underpinned by good volumes of physical and retail investment purchases,” wrote James Moore, an analyst at TheBullionDesk.com in a report published today today. “Following the wash-out of fund and speculation investment longs, the market is well placed to trade higher.”
Gold has been on what is essentially a decade long bull run. SPDR Gold Trust ETF (GLD), which tracks the performance of the price of gold bullion, has risen over 265 percent over the past ten years. The current economic volatility in consumer nations is likely to keep that trajectory on track. For that reason, gold miners, especially those with interest in nations with considerable unexploited resources, could be a smart investment for either the long or short term.
Miners represent a more affordable strategy for playing the gold trend. If the physical demand for the metal stays consistent, gold miners can logically be expected to benefit.
This could contribute to a bright future for Samaranta Mining Corporation (SAX.TSXV), a resources exploration and development company actively exploring for gold and other precious metals with a main focus on Colombia. The company initially is focusing on promising prospects in the immediate vicinity of Colombia’s largest gold mine as well as near term production projects and an existing operating gold mine. Earlier this month, the company signed a letter of intent with the Colombian Board of the High Community Council of Novita – Cocoman, which grants them a 90-day period of exclusivity to finalize terms and execute an agreement on a 117,647 hectare area in the Colombian department of Choco. The region where the property is located, the border between Colombia and Panama, has a long and successful history of gold production. Samaranta has high hopes for a continuation of that trend.
Unlike the U.S. and other areas that have exhausted the extent of many of their natural resources, Colombia remains vastly unexplored, creating financial opportunities for miners that exceed those available in more picked over nations. During the time between 2008-2009, production in Colombia grew by 39 percent. It’s Samaranta’s expectation that their aggressive strategy in the area, which includes four other exploration projects, will put them in a position to benefit from the rise in production and the ongoing strength of gold in the global market place.