As crude oil continues down today we are presented with a perfect opportunity to review why gold mining fundamentals can IMPROVE in a rising US dollar atmosphere. So many people run the equation through their heads: USD Strong = Run Away!
And while it sure is a rough ride along the way, a look at gold vs. crude (GLD-USO) and general commodities (GLD-DBC) below shows exactly why this environment – as opposed to the overtly inflationary one that many gold bugs like to tout – is the preferred one in which to invest in quality gold mining operation.
Also I might add, I am more interested in quality miners than the relatively richly valued royalty companies.
Bottom Line
Inflationary rallies can be exciting, but when oil and other assets out pace gold, it is degrading to gold miner bottom lines.
Deflationary phases can seem to drag on interminably, but as the grind out a gold rising vs. cost input commodities (and eventually human resources and human spirits) backdrop the fundamental foundation is slowly built. That is what I believe could be going on over these many months of grinding activity.
