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Gold Mining Stocks "Very Different" to Gold

THE "VERY DIFFERENT" behavior of Gold Prices and Gold Mining stocks has been noted by a leading UK wealth manager.

Speaking to the Financial Times, "At times, Gold Mining stocks and the gold price behave in very different ways," says Justin Urquhart Stewart, co-founder and marketing director at Seven Investment Management, which advises on fund selection and asset allocation.

Because, as the FT reports, and while "rising Spot Gold prices push up mining companies' revenues, their profit margins can be impacted by new taxes and regulations, higher costs and production problems."

Last week saw two London-listed Gold Mining shares fall sharply, despite new record highs in the US Dollar price of gold.

African Barrick Gold, part of London's blue-chip FTSE 100 index, lost 7.5% after it cut its production forecast following "organized and systematic" theft of fuel from a site in Tanzania, forcing it to sack some 40% of the project's mining team.

Petropavlovsk Plc – the third-biggest Gold Mining producer in Russia, and listed in London's mid-cap FTSE 250 index – meantime dropped over 12% from its recent highs, after a planned flotation of shares on the Hong Kong stock exchange had to be scaled back following weak demand from investors.

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