Mining for Gold is an Enormously Profitable Proposition
When I looked at my stock tracking website this morning, I saw that gold is at $1,665, silver at $32, and oil at $84. Then the stock indices, XGD at $24, HUI at $600, and TTGD at $400.
Say what? Come again?
I am tempted to rename this article.... "Buy anything and everything gold, hand over fist. This is the best buying opportunity ever in a sector known for big gains."
You see, the kicker is the statistic that I've buried in the middle, "oil at $84."
Most investors miss the significance of this. OIL IS A HUGE COST FACTOR IN MINING GOLD, or any other commodity for that matter.
Throughout the last decade, gold ranged from $300 - $800, and oil around $30-$50, and they generally moved in tandem so you never really saw a scenario where the gold industry turned tremendously profitable. Then during the boom, gold went to $1,200 and oil to $140, which still rendered largely the same economics for most mining operations. I, as an engineer, was scratching my head during the height of the boom, wondering how it was a boom at all except for in the stock market.
Now, however, Gold is 30% HIGHER than the top of the boom, and oil is 58% lower. I've followed the gold market for 11 years and I have NEVER seen economics like this before.
It makes me want to open a mine and mine the stuff myself. I am currently looking at various business opportunities to that end.
But suffice it to say, anyone taking gold out of the ground is making all kinds of money right now.
You'll start to see it in the next set of annual reports from the majors.
As for the juniors, all I can say is "buy before the crowd catches on."