gold is set to soar in 2014 by Mike King | January
Most analysts have taken
a dim view of gold, with most predicting prices lower than
today’s price of around US$1,240 an ounce.
But my view is that they’ve got it
wrong… just like they did last year.
Heading into 2013, gold had fallen slightly
from US$1,800 to around US$1,675, an ounce. Most analysts
were forecasting prices higher, with some expecting the
price the rise above US$2,000 an ounce.
(At the time, some commentators, perhaps
looking to put their name up in lights, were suggesting
US$5,000 an ounce wasn’t far away).
Unfortunately, gold experienced its worst
year in more than 30 years, leaving many commodities analysts
with egg on their faces. Spot gold fell 28%, but gold mining
stocks fell even more. The S&P/ASX All Ords Gold Index
slumped 61% – although internal issues at Australia’s
largest gold miner, Newcrest Mining (ASX: NCM), which makes
up a big chunk of that index, saw it drop 65%.
CIMB analyst David Coates has told the Australian
Financial Review, “the market is taking a less bearish
view on the gold price and that it will settle at a higher
level than people have factored in.”
At current prices, many gold miners will
struggle to make a profit, and as a result high-cost mines
are being closed around the world. Gold exploration is struggling
because the cost of producing the gold, particularly here
in Australia is close to or higher than the spot gold price.
In the US, tapering of quantitative easing
has begun, and most commentators expect quantitative easing
to end by the end of this year. What that means is that
the US economy is recovering strongly, and is likely to
see higher levels of growth, a higher US dollar and potentially,
With gold seen by many as a hedge against
inflation, we could see demand for gold climb and the price
head higher. For Australian gold miners, the bonus is if
the Aussie dollar falls further against the US dollar. That
could be good news for the likes of Silver Lake Resources
(ASX: SLR) and Northern Star Resources (ASX: NST).
Mr Coates has also identified Resolute Mining
(ASX: RSG) and Troy Resources (ASX: TRY) as amongst the
lowest cost gold producers – and likely to be more
resilient should the gold price fall further from here.
Now may be the prefect time to add these stocks to your
3 high-risk/high-reward resources
tips for your portfolio
Oil, copper, and gold continue to be in
high-demand -- and their popularity doesn’t look to
be slowing. We’ve uncovered three companies poised
to benefit from the rising prices of these commodities.
Get our brand-new report -- "3 Tiny Resources Companies
That Could Win Big" -- FREE!