# Mining Stocks Are Still Lagging The Precious Metals



## InTheMoneyStocks (21 April 2011)

The leading gold and silver mining stocks have recently lagged the precious metals themselves. Sometimes the leading mining stocks will lead the metal, however, they have been lagging the precious metals since mid-March 2011. Gold and silver are making new highs this morning while the Market Vectors Gold Miners ETF(NYSE:GDX) is still trading below its December 2010 high which was $64.62 a share. This morning the GDX is trading higher by $1.45 cents to $63.10 a share. The GDX will have intra-day resistance around the $63.50 level.

Some leading mining stocks that are trading higher this morning are Newmont Mining Corp.(NYSE:NEM), Randgold Resources Ltd.(NASDAQ:GOLD), and Goldcorp Inc.(NYSE:GG). These stock will usually trade in tandem with the GDX, therefore, watch for pullbacks when the GDX comes into its resistance level.







Nicholas Santiago
InTheMoneyStocks


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## jon the pom (18 September 2011)

Thanks for the graph.

I'm confused by the relationship between the market or spot value of gold and silver (or any commodity for that matter) and the value of mining shares. 
Basic logic would say that there should be a correlation between the two and while I can appreciate there are many variables and complication surely if gold prices are approaching $2000 dollars and at a guess it costs a mining company no more than between $500-1000 to produce 1 oz. of gold then they should be raking it in and so should their shares?

If the price of grain goes up all the farmers buy new tractors or go on holiday right? 

Cheers

Jon


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## Billyb (18 September 2011)

jon the pom said:


> Thanks for the graph.
> 
> I'm confused by the relationship between the market or spot value of gold and silver (or any commodity for that matter) and the value of mining shares.
> Basic logic would say that there should be a correlation between the two and while I can appreciate there are many variables and complication surely if gold prices are approaching $2000 dollars and at a guess it costs a mining company no more than between $500-1000 to produce 1 oz. of gold then they should be raking it in and so should their shares?
> ...




The simplest explanation is usually the correct one. Gold stocks are still -- stocks. Stock prices go up when sentiment is good, and go down or stay stagnant when sentiment and confidence is down (like now). Gold behaves the opposite to this. 

If its like the last gold bull market, then gold stock prices will start to rise soon after the bull market starts declining. This makes perfect sense because by that time people are obviously becoming confident again.


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## Tysonboss1 (19 September 2011)

Two things,

The gold producers would probably have the gold price hedged, so would be using their gold production to fill contracts negotiated months ago at lower prices,

And also even though they own lots of gold it will only be produced slowly over say 20 years, so any investor worth his salt would not value the company based on this years production profits when the price of gold is Lilly to fluctuate over time and will probably be lower in 12 months


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## jon the pom (19 September 2011)

Maybe I've got the basics wrong. 

If gold prices are high then the company makes more money when it sells its gold and the share price goes up in value? Unless it hedged the price years ago at the exploration stage when gold was worth less? 

Theres so much current demand at the moment and I dont see it in the mining share prices, like I said I'm missing the link here

Maybe the demand for paper gold is far higher than physical gold


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## Wysiwyg (19 September 2011)

> Maybe I've got the basics wrong.




Gold miners and explorers are trending up and are higher than they were years ago. Did you miss the boat?


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