One day does not make a trend and with the obvious trends being bullish for the dollar and bearish for gold, mining companies are being forced to deal with what could be an extended environment of lower bullion prices.
“Many junior gold companies are coping with low gold prices by re-engineering projects to reduce capital requirements. A lower cost alternative is heap leaching, where ore is stacked on impermeable liners in «heaps». A drip system is applied to dissolve the gold from the rock in a closed circuit that recirculates the spent solution. No milling and fewer moving parts are required, so the capital cost is much less than other methods of extraction. This has enabled junior developers in Nevada, Mexico, Peru, Burkina Faso, and elsewhere to move forward with economically viable projects,” said Van Eck Global Senior Gold Strategist Joe Foster in a note out Wednesday.
And has been par for the course during gold’s tumble, investors are sticking by miners ETFs while departing physically-backed funds. Since the start of November, investors have pulled nearly $950 million from the SPDR Gold Shares (NYSEArca: GLD), but GDX and GDXJ have seen combined inflows of over $92 million.
Chart Courtesy: ChessnWine, MarketChess.com