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Is this the catalyst gold investors have been waiting for?

It’s an understatement to say gold miners have struggled over the past two years.

One look at this graph says it all…

Gold2012-2014
Source: Google Finance

Since November 23 2012, the share price of Newcrest Mining Limited (ASX: NCM) is down 60%, Northern Star Resources Ltd (ASX: NST) is down 16%, Kingsgate Consolidated Limited (ASX: KCN) is down 85%, Beadell Resources Limited (ASX: BDR) is down 76% and Silver Lake Resources Limited (ASX: SLR) is down 92%.

The catalyst has been a plummeting gold price, which is down from around $1,650 per ounce to just $1,392 per ounce in that time, according to Perth Mint.

As fellow Motley Fool writer Regan Pearson pointed out here, very few of the above five miners are currently making good margins on their operations. Newcrest, the largest producer, had an all-in sustaining cost of $863 per ounce in the September quarter.

Is a gold price pop on its way?

Despite the price of gold falling to a low of around $US1,140 per ounce recently, there could be a reason for investors to hold out some hope for a recovery in prices.

Next Sunday, November 30 2014, Switzerland is due to hold a vote on whether its central bank should be required to hold 20% of its reserves in gold bullion. This could provide upward pressure on the gold spot price.

However, the chances of the referendum achieving greater than a 50% “yes” vote are slowly fading. According to a recent poll by Bloomberg 47% of citizens are tipped to vote against it, whilst according to Daily Mail, only 38% are expected to vote yes.

Is gold worth your investment dollars?

Despite recent turmoil in the Middle East, two airline fiascos and unrest in Ukraine, the gold price has fallen hard. Indeed, whilst the above five stocks may look exceptionally cheap, investors must be fully prepared to ride out the expected high levels of volatility and the potential for further downside.

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Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any of the mentioned companies.  

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