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We have been warned that Gold could go as low as 1190 before bottoming. There had to be a reason for that to happen.
Does that having happened change things or are we reacting the way we are supposed to in order to set up a bottom ?
Hi MM,
Please tell me you read this, a reason: https://rambus1.com/2018/08/12/weekend-report-163/
Also, it can go lower than 1190.
Mining is a difficult business. I think if half the people here really understood the problems that can occur in mining and what a rough business it is they wouldn’t be investing in this sector. Mining companies are shit shows of the investment world, just one accident or one flood away from closing a mine.
I digress though, one of the many, many metrics that those who study miners is ‘all in sustaining costs, and/or ‘cash costs’. When the margins get squeezed, investors will flee. Lower margins from lower gold price can have a significant impact on cash flow. If there is pinched cash flow, and they don’t have a large cash position, miners can go from heros to zeros overnight. Long story short, $1200/oz is one of those psychological barriers that cause investors to freak out. It intensifies the lower it gets. $1000/oz is doomsday for many miners.
🙂
Thanks, T-Bone.
Its interesting. Chart analysis, such as this, point to a lot more pain for the commodity currencies and PM’s , but cycle theory suggests we are carving out a yearly cycle low, which means we turn up imminently. It’s going to be fascinating to see if the power of the cycles can make any difference.