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wegorkie

Why Gold Mines Falling With Overall Stock Market?

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Hi,

I invested in gold in form of gold mines stocks in huge part. Last Friday we have stock markets slips maybe about worries of US economy strength. This is what I am waiting for as I play on bessa on stocks and hossa on gold.

Now when there are worries about dollar, inflation and economy, then gold should rise in value (capital escapes from inflation into gold). About mines - I supposed they should grow even more than gold. That is because their profit is from difference of produced gold price and their costs. As economy goes down, commodities go down as well as real labour cost. So the mine has lower costs, higher income.

That is why I was surprised by fatal drop in miners prices on Friday - 5% or something, much deeper that whole market? All this when gold price was keeping high? Why is that - I cannot understand, someone could explain it?

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Hi,

I invested in gold in form of gold mines stocks in huge part. Last Friday we have stock markets slips maybe about worries of US economy strength. This is what I am waiting for as I play on bessa on stocks and hossa on gold.

Now when there are worries about dollar, inflation and economy, then gold should rise in value (capital escapes from inflation into gold). About mines - I supposed they should grow even more than gold. That is because their profit is from difference of produced gold price and their costs. As economy goes down, commodities go down as well as real labour cost. So the mine has lower costs, higher income.

That is why I was surprised by fatal drop in miners prices on Friday - 5% or something, much deeper that whole market? All this when gold price was keeping high? Why is that - I cannot understand, someone could explain it?

In my opinion gold miners are likely to suffer in a similar way to any other business due to the fact that they are vulnerable to exactly the same things. Mining is very energy intensive, in the long-run it will likely become unviable. And also as you have found out, they are not going to be immune from a change in sentiment in stocks & shares.

What's driving the gold bull at the moment is people are getting nervous about having their wealth tied up in paper. You are still tied up in paper. The only advantages I can see over physical bullion is that you don't have to worry about storage and security, and you can get greater leverage on the underlying commodity price.

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Yeah i dont get it either. Actual physical gold shares (not mining) still fell by rather a lot. I decided to have a wee physical gold punt on friday and lost out nicely. Still live and learn...although l still don't get what l should be learning.

My best guess is that it was a rather steep climb to $720 plus so lots of large investors/funds decided to take profits and re-enter after this mini-correction forged from sentiment spilling over from the stock markets has ceased.

Or something.. :P

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Well about price of physical gold I am not worried at all. I am really sure it will go up over $700. I would be even glad to see correction under 650$ to buy more.

But I don't get why mines perform worse than gold - but well I got partly an answer here.

Can I ask what gold paper you are buying which are not mines? Are there any accessible on NYSE or somewhere?

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That is why I was surprised by fatal drop in miners prices on Friday - 5% or something, much deeper that whole market? All this when gold price was keeping high? Why is that - I cannot understand, someone could explain it?

Two words, over bought.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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