Are You Looking For Miners In Nevada?
Dutch Trader | Jul 08, 2013 12:39AM ET
We will see some price consolidation before the next bull market in gold starts again. Nevada could fuel the (junior) mining sector, with some interesting new discoveries going forward.
Background
Gold stocks are in bear market territory, but we think it's only temporary. The price of gold crossed the $1,900 mark per ounce in 2011, fueled by fears in the financial markets and the general belief that gold was a safe haven. Last October, gold was changing hands for $1,754 per ounce. Since then, however, the price of gold has fallen hard, weakening dramatically in recent weeks.
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Main Risk: Profitability Problems
Gold falling below $1,200 an ounce is certainly at the level where miners, especially the smaller ones, will face profitability issues. According to industry experts, the total cost of production varies between $1,000 and $1,200 an ounce depending on the scale of a miner's operations.
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