How the Five Principles of Capital Allocation Can Mean Gold Mining Success

The Gold Report: The price of gold is flirting with a five-year low. Do you attribute this solely to the strength of the U.S. dollar, or are there other factors at work?

Ralph Aldis: There are other factors. Most important is the strength of the equity markets. Looking at a six-year window, we have seen, for the third time in the last hundred years, the highest returns for such a period. This happened before in 1929 and 1999. These phenomenal returns have been fueled not by fundamentals but rather by the U.S. Federal Reserve, which is trying to jumpstart the economy.

All this has taken people's eyes off gold, but it won't go on forever.

TGR: The bear market in gold equities is now four years old. This means lower gold production and less exploration. Gold production from South Africa has collapsed. Shouldn't lower gold production result in a higher gold price? Continue reading "How the Five Principles of Capital Allocation Can Mean Gold Mining Success"

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