Current Market Rates Per Ounce
September 08, 2010 4:19:24 PM PST
| USD $ | CAD $ | |
| Gold (AU): | 1,256.00 | 1,302.47 |
| Silver (AG): | 19.93 | 20.67 |
| Platinum (PT): | 1,552.50 | 1,609.94 |
| Palladium (PD): | 522.00 | 541.31 |
| USD-CAD Exchange Rate: | 1.037 | |
J&M Coin & Jewellery Ltd.
127 East Broadway
Vancouver, BC, V5T 1W1, Canada
Tel: (604) 876-7181
Toll Free Ordering: 1-888-244-9999
Fax: (604) 876-1518
e-Mail: jandm@jandm.com
Web: www.jandm.com
Current Gold Prices Minus Current Oil Prices = Buy Gold
By Greg Silberman
September 5, 2007
Gold stock investors may be the only group of investors who sell when their companies' profits are increasing.
A brief inspection of the financial statements of any gold company reveals their biggest expenses are labour and energy. In fact, we often forget just how labour and energy intensive gold mining is and how much effort it takes to mine 1 oz of gold!
Now whilst gold and gold stocks did not fair well during the last selling squall, relatively speaking, they did very well. See Today gold price and gold stock price ignore bullish fundamentals for further explanation.
Take Gold versus Crude Oil for example:
Chart 1 - Gold outperforms crude oil when S&P500 falls
During the last stock market sell-off, gold rose against crude oil (blue rectangle). Cheaper energy costs have a positive effect on the bottom line of gold miners.
Chart 2 - Gold outperforms industrial metals when Yen rallies (bottom of chart)
Now take the Yen carry trade. This has had an overwhelmingly positive effect on elevating asset prices. A reversal (higher) in the Yen has caused asset prices to fall and prompted the Fed to reduce its discount rate as the risk of a global slowdown increases.
A weakening Yen (bottom) has coincided with a period of gold outperforming industrial metals. This not only reduces the cost of gold mining as industrial metals e.g. steel falls (relative to gold) but also increases the attractiveness of gold miners as employers in an environment of heightened job loss fears.
In other words, labour costs will be less or at worst stagnant for gold miners which also feeds positively into the bottom line.
Therefore, the relative outperformance of gold versus its major cost components has caused gold miners to become more, not less profitable.
So why dump gold stocks?
The answer lies in market sentiment. It's called a panic because investors lose their sense of reason and sell out to relieve their emotional pain.
Smart and brave investors capitalize on this and buy gold stocks at bargain basement prices. It takes a strong and dedicated investor to do this. But it's ultimately the stuff that dreams are made of!
DISCLAIMER: This article is intended solely for information purposes. The opinions are those of the author only. Please conduct further research and consult your financial advisor before making any investment/trading decision. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.
GREG SILBERMAN CA(SA), CFA is an investor and newsletter writer specializing in Junior Mining and Energy Stocks. He can be reached at greg@goldandoilstocks.com. You can visit his website at http://blog.goldandoilstocks.com for a free trial of his newsletter.
Home | Products and Prices | Buying | Selling | FAQ | Articles | Forms | Top
Website © Copyright J&M Coin & Jewellery Ltd. 2007. All rights reserved.
Pricing index programming and site hosting by Sandrix Technologies Ltd. (AXD)