The recent rise in prices have caused some gold mining companies we will see lower quality gold mines being built to relax their standards for financial and operating discipline. With higher gold prices. These are deposits that were not economic at lower prices because they would have high operating costs and/or high capital costs due to low-grades and/or mining challenges.
The industry is beginning to bifurcate between dividend-paying companies with high quality, low cost mines and those with lower quality projects and higher risks. Until there is confirmation that higher gold prices are here to stay, it seems too early in this cycle to speculate on companies that aren’t maintaining the discipline learned from the mistakes of the last cycle.
MVIS Global Junior Gold Miners Index vs. Gold Price
08/31/2019-08/31/2020
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