Bet on gold mining stocks for the upcoming gold rally!

Last Updated: 8. Dezember 2023By

Normally, the stocks of gold mining companies move like a lever derivative on the gold price: if gold rises by +10%, gold mines in a good market environment shoot up by +30% or even +50%. But not in 2023. The mining values of the gold sector have not caught up with the strong performance of the gold price up to mid-November.

While gold is trading near all-time highs and briefly jumped above $2,100/ounce in early December, the stock prices of many senior producers, junior producers, and explorers are still near their multi-year lows or even all-time lows.

The low stock prices of gold miners now offer you an excellent opportunity to buy first-class gold producers at absolute bargain prices. This also applies to silver and silver mine stocks. But today we are focusing on the gold market.

Gold mines have huge catch-up potential to the gold price! There are reasons for the unusual underperformance of gold mines. The most important reason for the gold producers – called senior producers and junior producers in the industry: the costs of the mining companies have exploded due to inflation in 2022 and 2023.

Higher labor costs, higher transportation costs, higher equipment costs and sometimes significantly higher energy costs have resulted in significantly increased costs. These were – and this is the decisive problem – significantly higher than the increase in the gold price. So, costs have risen between +30% and +50% in the last two years, while the gold price has only risen by around +14%.

The result is obvious: profits declined – as did the stock prices of gold producers. Why should investors buy mine stocks if costs are rising, profits are falling and there is no growth story in gold mines? But all these points turn 180 degrees when the gold price starts its rally in 2024!

Gold producers: problems from 2022/23 turn into an advantage in 2024! This is exactly where your opportunity lies! Because the worst part of the inflation increases is now behind us. Costs are likely to increase significantly more slowly than in 2022 and the first half of 2023. On the other hand, if the gold price takes off in 2024, the profits of gold producers (not the explorers) will skyrocket – and send the stocks up!

Conclusion: Nobody is currently interested in gold mine stocks. Institutional investors are still massively underweight in gold and gold mining producers. This is often the ideal anti-cyclical buying point on the stock market! The stock market does not yet see the new positive factors for gold producers in 2024!