Gold Speculator

Gold is – and always has been – a safe haven asset. When times get tough, gold tends to do well. Very well.

And of course, post-Brexit, things are very uncertain and many believe we could be on the verge of a much bigger crisis. Indeed, we are all a little worried about what could happen to the stock markets.

And it’s not just here in the UK. Because the global financial system is so interconnected these days… the concern is everywhere.

So, times are tough and we’ve all heard people talking about gold and where it’s going. Some stories compelling – others less so. But I think there’s one chart says it better than any I’ve seen.

Take a look at this for a minute:

You can see the price action has been following this chart surprisingly closely and if it continues to into the ‘Media Phase’… well, the price of gold could soar.

But this is not just about the gold price itself. As you may already know… mining stocks provide leverage to the gold price. That’s why we publish Gold Speculator.

You see, mining companies have what are referred to as All-In Sustaining Costs (AISC). This definition is designed to capture all the ongoing costs associated with getting the gold out of the ground.

This varies enormously but many of the major producers operate in the range of $1,000 to $1200 per ounce.

Let me take the mid-point of $1,100 to explain what that means.

You see, with a gold price of $1300/oz and AISC of $1,100/oz that’s a profit of $200 /oz for the mining company. Pretty straight forward, right?

But here’s the thing..,

These costs are largely fixed, but for the purposes of this explanation let me increase them by, say, 50% if the gold price takes off. That would take our $1,100/oz cost base to $1,650/oz.

But remember, in this scenario, the costs go up because the gold price has also gone up.

Let’s say the gold price goes up to, say, $5,000 (only half of where Jim Rickards thinks it could go) that’s a profit of $3,350/oz. For the mining company, that’s a percentage profit increase of 1,575% on the original profit of $200.

So, if a mining company is seeing huge profits like this, you naturally expect that to be reflected in the share price of that company. It’s what enables us to see some huge gains in gold miners.

And that’s why we’re so pleased to be publishing Gold Speculator right now.