Junior mining and exploration companies can offer investors increased exposure to gold price appreciation. Share prices for junior miners can be leveraged to gold price increases, an initial discovery, or the significant achievement of commercial production.
Sydney Morning Herald reported that Newcrest Mining's (ASX:NCM) shares fell after news its gold grades were diminishing.
Gold was on track to post its biggest weekly advance in four weeks, Friday, over speculation that central banks may boost their purchases of gold.
Bloomberg reported on the disconnect between gold stocks and bullion prices.
Gold futures rallied Monday, tracking the global equity markets, as record Black Friday sales and evidence that European leaders would come up with a plan to curb the Eurozone’s debt crisis boosted investor sentiment.
Chris Ecclestone, Mining Strategist, explained the potential for gold mining companies, “the interesting thing is that Chinese enterprises in the past have roamed the world searching for base metals and products that they can take back to the mother land. In this case a purchase of a gold company in Brazil, it is definitely a mold breaker. It means that potentially all gold stocks within a certain size are fair game.”
CFTC data suggests that hedge funds are holding their biggest bet on higher prices since mid-September. Money managers raised their combined net-long position in US futures and options by 6.8 percent to 148,279 contracts in the week ended Nov. 1.
Gold followed the equities lower on Friday, as discord among the G20 leaders on boosting the IMF’s firepower to fight the Eurozone debt crisis led to investor apprehension.
Following the massive sell-off of gold in September, the price of the yellow metal has stabilized is headed for recovery after dropping from the record high of $1923.70 on September 6.
Polar Star Mining Corporation (TSX:PSR) announced the beginning of production at its Chépica epithermal gold-silver-copper mine in central Chile.
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