I’d like to introduce my first article to run in the Oredigger: The Business Corner. The purpose of this article is to share with you, the good people of Mines, my thoughts on all things business. To kick things off lets talk about the gold industry and how you can profit from its ups and downs in the stock market.
The gold industry has been around as long as humans have valued gold for its inherent hardiness, malleability, and shininess. In September of 2011 gold hit an all time high at $1,895/troy ounce mostly due to the recession and subsequent market turmoil. As past history has taught us, when the economy goes into disarray or into a recession, investors seek to stabilize their portfolio by buying gold because throughout history, gold has been valuable and should remain valuable regardless of the current economic climate. Seeing as that principle has remained true for 3000+ years, there’s no logical reason to doubt that humanity will stop valuing gold for as long as people buy and sell goods and services. With a history lesson out of the way you’re probably wondering, “Well Chris, why should I care about this when I have 3 tests this week and no girls to talk to or party with?” Great question hypothetical average Mines student. The reason you should care and read this instead of studying is because you can profit from gold’s tumultuous ride on the waves of commodity prices. Presently gold is around $1,351/troy ounce which obviously is a far cry from its robust high in 2011 but in its present lower valuation lies serious investing opportunity. Year to date, gold is up 12.5% on market uncertainty in China, a slow recovery in the U.S., and increasing demand from investors worldwide. With gold’s rebound taking off right now the all important question must be asked, “How can we make money from gold’s recovery?” The answer is in gold mining stocks such as Barrick Gold (NYSE:ABX) $20.50 +0.12 (0.59%) and Kinross Gold (NYSE:KGC $5.19) -0.03 (-0.57%).
These stocks represent affordable means for the average investor (or average Mines student) to profit without shelling out $1,350 for an ounce of gold. Gold mining companies such as these have been hurt from the tumbling price of gold and as such have taken drastic steps to increase their profitability and operational strength. These measures include selling non-core assets, reducing expenditures, and restructuring debt which all make for a more profitable company boasting higher profit margins and more achievable forecasted earnings. While I claim no liability for the results stemming from any trades or investments anyone makes from reading this article I believe the advice given in this article gives an insight into an exciting emerging investment opportunity and can help you strike gold. Consult with a financial professional before investing instead of just listening to someone in a school newspaper.
** All stock prices researched on 3/3/2014, changes may have occurred since then.