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Gold Miners Are in Deep Schist
If you think gold has been in a nose-dive lately, then you haven’t been watching most of the gold mining industry’s stocks.
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Click to Enlarge While the SPDR Gold Shares (NYSE:GLD) has lost more than 13% of its value since its early October peak, the Market Vectors Gold Miners ETF (NYSE:GDX) has fallen more than 35% during that same span.
But how can two closely related investment vehicles perform so differently?
Do the Math
Quick quiz: On average, how much did it cost — in total — to dig up an ounce of gold when the metal was priced at its October peak level of $1,803 per ounce?
The answers vary a little, depending on who you ask and the company in question. In an interview about a year ago, AngloGold Ashanti (NYSE:AU) CEO Mark Cutifani said it would be difficult for any miner to produce gold for less than $1,200 per ounce. That’s once all the bills for exploration, mine development, administration and everything else are paid.
Iamgold (NYSE:IAG) paid an “all in” average of $1,162 per ounce in 2011, though its costs were up significantly in 2012, to an average of $1395 per ounce. Thomson Reuters’ Gold Fields Mineral Services division recently reported the average cost to mine an ounce of gold was $1,150 in 2012.
Read More: http://www.stockgoldmarket.com/gold-miners-are-in-deep-schist
