{"id":24625,"date":"2011-10-20T22:56:09","date_gmt":"2011-10-21T02:56:09","guid":{"rendered":"http:\/\/countingpips.com\/fx\/2011\/10\/20\/is-there-any-upside-left-for-gold-investors\/"},"modified":"2011-10-20T22:56:09","modified_gmt":"2011-10-21T02:56:09","slug":"is-there-any-upside-left-for-gold-investors","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/10\/20\/is-there-any-upside-left-for-gold-investors\/","title":{"rendered":"Is There Any Upside Left for Gold Investors?"},"content":{"rendered":"

By MoneyMorning.com.au<\/strong><\/p>\n

Gold fell $32.50 in US dollars yesterday. (It’s still up 17% for the year. But down 14% from the $1895 high in August.) And the gold stocks followed it down.<\/p>\n

We guess a question you might ask yourself now is: ‘What’s the upside for me as a gold investor?’<\/p>\n

If the experts are calling for gold to get to US$2000… and gold is trading at US$1620… you’re looking at, what, a 23% gain? Is that enough to bring new gold buyers into the market? And if not, what does that mean for you? And what does it mean for gold stocks?<\/span><\/p>\n

Most gold explorers had a terrible time in September. The junior gold miners ETF fell off a cliff on the 20th of September. This may be down to hedge fund activity in the sector.<\/p>\n

<\/p>\n

Gold Explorers ETF (GDXJ)<\/div>\n

<\/strong><\/p>\n

\"Gold<\/a>
Click here<\/a> to enlarge<\/div>\n

<\/p>\n

Source: Yahoo Finance<\/div>\n

<\/em><\/p>\n

In theory, a gold stock is worth the value of its future cashflow<\/u>. So a stronger gold price should lift gold stocks (remember, gold is up 17% this year). That’s pretty much the pattern we’ve seen in the past.<\/p>\n

But what has happened to gold stocks as gold made new highs every few months? Well… they fell…<\/p>\n

<\/p>\n

Gold price goes up – Gold stock index drags lower<\/div>\n

<\/strong><\/p>\n

\"Gold<\/a>
Click here<\/a> to enlarge<\/div>\n

<\/p>\n

Source: Google finance<\/div>\n

<\/em><\/p>\n

Gold stocks normally amplify the gains from gold. If gold goes up 10%, then a good gold stock should go up 20%. So traders look for this ‘leverage’ to the gold price in gold stocks.<\/p>\n

But the gold price (red line) has hugely outperformed gold stocks (blue line).<\/p>\n

So, what does this mean for gold stocks now?<\/p>\n

For one thing, wherever the price goes, gold stocks are still worth the price of their future cash flows<\/u>. And as the gold price rises further, so should the stock’s value.<\/p>\n

And that means with the gold price still high and gold stocks at a low relative price, current prices are incredible value to new investors.<\/p>\n

Dr. Alex Cowie
\nEditor, Diggers & Drillers<\/em><\/strong><\/p>\n<\/p>\n

Related Articles<\/em><\/strong><\/p>\n

Why Chinese Monetary Planning Means More Volatility for You<\/a><\/p>\n

Australia: The World’s Investing Casino<\/a><\/p>\n

Why China’s Hidden Debt is Bad News for Aussie Stocks<\/a><\/p>\n

The Great Indian Coal Rush<\/a><\/p>\n

The Other Side of Short Selling<\/a><\/p>\n

From the Archives…<\/em><\/strong><\/p>\n

Can You Beat Goldman Sachs?<\/a><\/strong>
\n2011-10-14 – Kris Sayce<\/p>\n

Three Stocks to Sell Before China Slumps<\/a><\/strong>
\n2011-10-13 – Kris Sayce<\/p>\n

Why Allocation Beats Diversification<\/a><\/strong>
\n2011-10-12 – Kris Sayce<\/p>\n

Huge Rally – Is the Low In?<\/a><\/strong>
\n2011-10-11 – Murray Dawes<\/p>\n

Queensland Housing’s 100-Year Slump<\/a><\/strong>
\n2011-10-10 – Kris Sayce<\/p>\n

For editorial enquiries and feedback, email moneymorning@moneymorning.com.au<\/a><\/p>\n

\n<\/img><\/a> <\/img><\/a> <\/img><\/a>\n<\/div>\n


\nIs There Any Upside Left for Gold Investors? <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

By MoneyMorning.com.au Gold fell $32.50 in US dollars yesterday. (It’s still up 17% for the year. But down 14% from the $1895 high in August.) And the gold stocks followed it down. We guess a question you might ask yourself now is: ‘What’s the upside for me as a gold investor?’ If the experts are … <\/p>\n

Continue reading “Is There Any Upside Left for Gold Investors?”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-24625","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/24625","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=24625"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/24625\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=24625"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=24625"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=24625"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}