Big Trouble Ahead For These 7 Miners
China’s supposedly insatiable demand for gold could be stagnating, and that’s a development that could send gold stocks tumbling. Bloomberg reported that Chinese investors and consumers are increasingly staying away from the precious metal. The report was based on a series of interviews the news service did with jewelers in Shanghai and Hong Kong.
Chinese jewelers think that the steady price decline in gold since September has been the main reason for the fall in the demand. This seems to indicate that Chinese consumers and investors are more investigated and in tune with the world. They’re seeing that traditional beliefs about gold as an economic security may not hold water in today’s world.
It should be noted that there is no statistical evidence to show an actual fall in Chinese gold demand. Instead, the report is based on anecdotes gathered from jewelers. Still, it doesn’t bode well for the stock prices of companies like GoldCorp (GG), Newmont Mining (NEM) and Barrick Gold Corporation (ABX).
Particularly hard hit could be producers who have been part of a wave of massive expansion in recent years in the belief that China’s thirst for gold could never be quenched. Another problem is that the economic slowdown in China seems to have stopped the almost limitless growth in consumer spending in that country.
It is unclear if the Chinese lack of demand is a permanent trend or not. Some experts note that the Chinese tend to stay away from precious metals when prices are falling, just like everybody else.To continue reading, click here.