Gold stock indices have outperformed the metal this year thanks to consistently improving results from the miners. Operating (cash) costs have declined since a relentless inflationary spiral peaked in early 2013. Capital projects have been pared, improved, or shelved. Many companies have met or beat guidance this year. Management focus on further improvements suggests the trend can continue in the low gold price environment. The industry has geared itself around a USD 1200 gold price with room to economize further if needed. The low cost structure also positions the miners favorably for any increase in prices.

Projected 1Q 2014 Co-Product Cash Costs (USD/oz)

Source: UBS Global Research. Gold Producer: Cash Cost Tracker Q1/2014
Data as of 21 April 2014

About the Author:
Joe Foster has been Portfolio Manager for the Van Eck International Investors Gold Fund since 1998 and the Van Eck – Global Gold UCITS Fund since 2012. Mr. Foster, an acknowledged authority on gold, has over 10 years of dedicated experience in geology and mining including as a gold geologist in Nevada. He has appeared in The Wall Street Journal, Barron's, and on Reuters, CNBC and Bloomberg TV. Mr. Foster has also published articles in a number of mining journals, including Mining Engineering and Geological Society of Nevada.

The article above is an opinion of the author and does not necessarily reflect the opinion of MV Index Solutions or its affiliates.