Investing in Gold Mining
Is Investing in Gold Mining Better than Investing in Gold?
Gold has been fetching a very high price in the last couple years and it currently trades at about $1,200 per ounce. While this has been great for those trading the commodity, one fund manager says it may be nearing the peak and that the better investment is in mining gold. Vedant ‘VK’ Mimani, the founder of Atyant Capital, a macro fund in Boca Raton, Florida focused on precious metals has made the case for the business of gold mining in a recent article.
The world is in the midst of a credit contraction, of the kind that always follows credit expansions. We have found from historical study that these contractions in credit tend to run for about twenty years. During every single prior credit contraction, the real price of gold, as measured against all commodities and assets, had increased. This increase in the real price of gold represents expansion in profit margin for the gold mining industry.
The last major credit contraction occurred during what we now refer to as the Great Depression. During that time, gold miners such as Homestake Mining were among the few companies to reward its shareholders. The Financial Crisis of 2008 stayed true to form. Starting September 2008, gold once again has started to outperform all commodities and assets.Source
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