Watch Out for the Price of Gold Stocks! They are set for Bull Runs
Presently, gold stocks are striving to outperform gold bullion. We all know the abundance of money one can make if one invests in gold at the right time.
If we look at the historical background, gold stocks have always outperformed gold bullion as mining companies always benefit whenever gold prices go the upward swing while the cost of production remains unchanged so that the excess revenue leads to increase in gross profits.
When there is increase in gross profit without a corresponding increase in the cost of production, the positive side we should expect is the increase in the net profits hence leading to a rise in the price of gold stocks.
At the beginning of gold bull market, many discerning investors gained higher profits from their gold stocks more than investments in gold bullion. This was evident during the initial stages of the gold bull market witnessed from 2000 up till 2008.
The price of gold stocks rose from $43.87 in October 2000 to pick at $195.25 in June 2008 which shows a percentage gain of about 345 using PHLX Gold and Silver Index (XAU) while the price of gold bullion rose from $264 during the same period of comparison to $930 reflecting a percentage gain of 252.
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