Why is gold doing so shitty?
- Thread starter SoyUnGanador
- Start date
Good on you timdug! I bought some miners awhile back, wholly fuck I got slaughtered, they are down tons.
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Good\ + if oil hits $50 like some big banks forecast;
no where is it written gold has to uptrend. Gold is a luxury+ US mint + wedding rings dont use much @ best...................DGP is dpwntrended much of the year + volume is very down\trendy from what is was in 2008
One old timer died with a bag full of gold on his donkey+ wrote in the sand ''died rich
'' but it turned to be fools goldGod DAMN MrMuppet, I don't have a hard time understanding that, even worse, I never had a CLUE that was the case LOL! Thanks for filling me in.
Although, if oil prices up and miners down, not a good time to buy miners for when oil reverts to norm?
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THEN that would depend on price of gold+ demand for miners
Gold for sure +dividend pay'ng gold stocks better than bank cd; SPY tends to out perform that sector[ Edit;of course some of those gold sector stocks in IBD supertrend ]
Also if you are looking at the GDX vs the GLD, I'm not sure if I wanted to be a gold miner right now:
Interest rates are up, meaning credit lines to fund exploration are more expensive, actual exploration costs are more expensive (energy/raw materials) while gold is declining which cuts into their profit margins.
Remember, most gold miners are looking for funding based on the gold that is still in the ground aka. "look, I have access to x tons of gold and now I need money to dig it up. My cost per ton is y and at the current price of gold forwards I can sell 2024 futures at price z, so my margin is this big"
They receive the money and have two years to dig it up. When gold rises and they sold too far out, there is a duration mismatch between production and delivery. They will blow up because margin for the futures cannot be covered in gold but it needs to be cash. So when they run out of dollars, their futures position is liquidated...and usually the company, too.
Interest rates are up, meaning credit lines to fund exploration are more expensive, actual exploration costs are more expensive (energy/raw materials) while gold is declining which cuts into their profit margins.
Remember, most gold miners are looking for funding based on the gold that is still in the ground aka. "look, I have access to x tons of gold and now I need money to dig it up. My cost per ton is y and at the current price of gold forwards I can sell 2024 futures at price z, so my margin is this big"
They receive the money and have two years to dig it up. When gold rises and they sold too far out, there is a duration mismatch between production and delivery. They will blow up because margin for the futures cannot be covered in gold but it needs to be cash. So when they run out of dollars, their futures position is liquidated...and usually the company, too.
The right time to buy miners is:
- low interest rates OR an equity bull market (insted of asking the bank for a business loan, they can just IPO or sell additional shares)
- low energy prices
- gold bull market or at least stable demand for gold looking forward.
Basically everything that increases profit margins for miners, which is basically the exact oposite of what we're seing right now
- low interest rates OR an equity bull market (insted of asking the bank for a business loan, they can just IPO or sell additional shares)
- low energy prices
- gold bull market or at least stable demand for gold looking forward.
Basically everything that increases profit margins for miners, which is basically the exact oposite of what we're seing right now
MrMuppet, thanks so much for all that, so very helpful. I'll need to study it when I'm off work to understand it fully, but thank you!