Gold Miners In 2017 – Trading Tips

What are the prospects for gold miners in 2017? Despite what you might have heard from some more doom laden descriptions, the outlook is not necessarily a bad one. Consider the case of 2016. How did gold and gold shares perform over that particular twelve month period? The answer is that gold actually had a good year when you strip out all the gloom and woe which naturally accompany short term fluctuations and volatility. Gold started 2016 trading at US$1.078 per ounce and ended the year trading at US$1,177 per ounce. A rise of US$99 is a solid performance, an increase of 8% over the twelve months and hence gold started 2017 ‘trading green’. If you were not aware of this then it may have been that you were distracted by some of the short term events during the year, such as gold rising to a peak of $US1, 367 before falling back later. It is always important to remember that the precious metals market is liable to emotional fluctuations. However, if you are interested in trading gold then you will have been following the fortunes of gold miners in 2017. You may have utilised the VanEck gold miners index and be looking for a stock that will outperform the industry benchmark. What sort of indicators should you be on the lookout for as you decide how to invest in gold miners for the rest of the year of 2017?

One strategy which you can pursue when you are deciding on exactly which gold miners in 2017 will attract your investment is to study companies which have been targeted for takeovers, as it is typically the case that such takeovers are carried out at a premium, which results in the shares typically performing better than would otherwise be expected. Other factors to bear in mind when you are deciding on which gold miners in 2017 to invest in are the typical, basic factors which probably interest everyone; does the company have a healthy balance sheet? Are its operating costs towards the lower end of the range? Are there any particular political or regional economic factors which will affect the company in the short term?  Remember also the emotional factors which we mentioned above. Gold becomes popular when people fear the immediate future, perhaps for political reasons and are concerned that this political turmoil will result in the stock market suffering. As the immediate panic dies away, so the demand for precious metals in general and gold in particular, falls back to its more normal levels. This is the case with gold always and while you should definitely bear in mind, you should also remember the performance of gold in 2016 as a whole. If you can do this and focus on those gold miners with tight costs and healthy profits, especially those which might well be taken over, then there is no reason why you should not be able to invest satisfactorily in gold mining shares in 2017 and subsequently.

(Simon Topliss, Research)

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