Fasten your seat belts because if you are invested in the mining sector right now you are in for a ride. The stock market, in general, has volatility, but when you get into sectors like mining, especially Gold, you tend to see a little more volatility in the market. Gold spot price is mostly controlled by the U.S dollar price. If the dollar is high, Gold goes down, and vice versa. Although recently we have been seeing a high dollar and gold demand. This happens when there is a little more uncertainty in the markets or global fear and tensions are rising. Gold is known as a safe haven for investments so in times of trouble, people flock to gold.
Gold and mining investing are very cyclical which means that it goes through huge booms and bust. the prices are either very low or very high and entering and exiting these cycles often leaves investors making or losing a lot of money. Since January 2016 we have started to see a reversal in the Gold market. Gold & Silver have been the best-performing sectors in the market. Gold reach a high on July 7th at $1366 an ounce. today July 20th we are at $1318. So even though we saw a nice run up in the price of gold we are experiencing a pull pack right now. This pull back in the Gold price is having an effect on Gold stocks as well. Gold stocks today are down on average of 5%. so while the yellow metal is experiencing a drop of about only 1 % this 1% drop in Gold price has a bigger effect on actual stocks which are based on the price of Gold. When these pullbacks happen when entering a Gold Bull Market many people begin to buy more thinking that the bull will continue to run and try to better their position. in most cases, this is a good idea, but the markets often play tricks and you never can tell when the pullback will stop. One thing is for sure that these markets are cyclical and we are overdue for a correction. The Gold mining industry has been through one of the worst bear markets in 40 years and I believe this is truly the beginning of the next Bull market. It has begun as we have already seen a huge run-up since the beginning of the year. We are currently seeing a pull back in prices so if you believe it is a beginning of a bull market then adding to your positions when the prices drop is a great opportunity, just make sure you can handle the ride!