Gold stocks have taken a beating over the past few months, but perhaps it was just what they needed.
Newcrest Mining (ASX: NCM), Australia’s biggest gold producer has dropped more than 21.73% in the last two months but investors have started snapping it up. This week, buyers have pushed the share price back up 10%, regaining some dignity for the gold mining heavyweight.
Newcrest hasn’t been alone, Silver Lake Resources (ASX: SLR) has been the biggest loser in the past three months, dropping from above $2.50 to open today at $1.15. Not much seems wrong with the gold producer and explorer and investors yesterday confirmed it in a price rally, up 11.11% at close.
Perseus Mining Limited (ASX: PRU) has also seen gains this week of over 10% despite dropping 20% since the beginning of April. Clearly punters are again seeing the value in gold – a shiny, heavy piece of metal that can be stored and gazed upon when in need of reassurance in tough economic times. However, that only applies if you buy the gold for yourself.
Many investors refuse to acknowledge the value of investing in gold and even Warren Buffett, arguably the best investor ever, has said that he prefers investing in is long-term well-managed businesses.
It was just a matter of time before gold producers would start to regain some of their lost share prices but whether or not they can remain as competitive as they have been in recent years into the future is another question altogether. Buying companies that are cheap has clearly made some people into billionaires, but off the top of my head I can’t think of anyone who’s done the same with gold.
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