STOCK-MARKET SHARES in Gold Mining companies will continue to lag the rising price of gold, according to a leading mine-sector analyst.
"Higher Gold Prices doesn't always mean higher [profit] margins," says Charles Cooper, analyst at Oriel Securities in London, speaking this week to Reuters.
"It means higher revenues potentially, but you have to be concerned about [Gold Mining] management competence, operational cost efficiency and underlying inflation, amongst other things."
The recent rise in gold prices, which has encouraged investment cash into Gold Mining stocks, now puts the major miners on a price/earnings ratio of 20 times – almost twice the level of other sectors including healthcare, telecoms and other resource-sector stocks, says Reuters.
"If you invest in Gold Mining equities, you are taking a lot of other risks through which you may be rewarded," says another stock-brokers' analyst, Tom Gidley-Kitchin at Charles Stanley.
Gold Mining CEO Graham Briggs, chief of the world's fifth-largest gold mining company, Harmony Gold, this week predicted that the price of gold will rise and hold around $1500 in 2011.
Buying Gold today? Make it simple, secure and cost-effective at BullionVault...