Gains in Gold: Countries to Profit From
It’s a Great Time to be a Gold Miner…
As I pulled up gold prices on Bloomberg, I couldn’t help but hear his words again: “I’m telling you, it’s great to be a gold miner right now.” Spoken by the CEO of a gold mining company that operates in Mexico and Canada, this statement proved to be true.
As it turns out, it is a great time to be a gold miner … as long as you’re outside of the U.S.
Foreign Gold Miners Have the Advantage
Miners who produce in Mexico, Canada and Australia are making huge profits. That’s because gold priced in those currencies is at, or near, all-time highs. And they get to pay their workers in those currencies … This means their costs are low. At the same price, the stuff they produce — gold — is ripping higher.
Now, we can use this to our advantage. All we have to do is find companies that operate in places with high gold prices. This works two ways…
First, the companies can sell their gold at high prices.
Second, high gold prices reflect weak currencies — so they’re paying mine costs in the local currency. This works well.
The Problem with U.S. Gold Miners
However, the reverse is also true. Companies mining gold in the U.S. have a headwind compared to their foreign peers. They are selling gold that’s well below its high.
And they are paying costs in one of the strongest currencies in the world — U.S. dollars.
I strongly recommend that you hold gold miners in your portfolio right now. We see a solid bull market emerging in gold and precious metals into 2019. And if you want to find the companies that will outperform their peers, stay out of the U.S.
As my Canadian friend said, focus on miners operating in Australia, Mexico, Canada and South Africa. They will be the biggest winners in this bull market.
Editor, Real Wealth Strategist