While not all investors prefer gold stocks, watching them can offer some important insight, analysts suggest. Gold mining companies like SPDR Gold Trust and Newmont Mining are being watched by analysts who write for the leading finance and investing publication, Forbes.
They do this because it could indicate some of what lies ahead in the future for the yellow metal. Those who hold physical portfolios of precious metals would be wise to pay attention to how stock from mining companies perform, the analyst stated recently because we are reaching the time of year when gold prices are most likely to bottom out.
Elaborating, the writer noted that, "From a seasonal standpoint, gold typically bottoms in late June through late July, then turns higher in August."
Understanding these cycles can be key to getting more not just from gold stocks, but also from holding actual physical gold assets, too. Precious metals are a great long-term investment, but during the short term, many of those who were once bullish may get rattled by the changes they see in prices. As a hedge against inflation, investing in gold makes sense, but in order to profit, there must be a willingness to face fluctuations in the near term.
"Though gold’s recent rally was impressive, the daily volume analysis is still not yet indicating that a bottom is in place," the Forbes columnist wrote. "For those who are waiting to buy gold, there are some specific levels where I am looking to buy, as I do expect GLD to be significantly higher by the end of the year."
While no expert, regardless of their level of prestige, should have their word taken as gospel, the analyst's thinking does line up with several other perspectives recently publicized in the media.
A writer at Market Oracle pointed out that, "Mining company stocks normally rise and fall in tandem with the price of the product they produce, the bullion and the un-mined reserves of that product they still have in the ground."
In the end, while gold stocks certainly offer us hints at where gold prices might go, it is always important to keep an eye on the long-term as real growth often takes time.