Leverage

Good piece @321gold.com written by Steve Saville. Steve shows that over the very long-term, the large cap miners don’t outperform Gold. He asserts that this is likely because of costs associated with mine depletion. Steve also points out that you are likely to outperform Gold if you can select the right junior companies. Interestingly, we … Continue reading

Mining is a tough business and profits are rarely easy to come by. I learned the concept of the “real” price of Gold from Bob Hoye at Institutional Advisors. This concept ignores the nominal price of Gold (i.e. ignores the currency effect, which is difficult for paperbugs but easy for long term Gold bulls) and focuses on the price of Gold relative to the price of other commodities as a ratio.

As we can see gold has broken its 2008 high and is starting another rally which we have seen several times before. I figure we could see gold rally for another 3-5 months and possibly reach the $1500 -$1600 level before forming a multi month or year consolidation.