Barrick Gold Corporation (USA) (ABX), Freeport-McMoRan Copper & Gold Inc. (FCX): Falling Gold Prices are Starting to Hurt Miners

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Elsewhere, Newmont Mining Corp (NYSE:NEM) predicted that its all-in cost of gold production per ounce will be around $1,100-$1,200. The company has also based its revenue and earnings prediction on the assumption that the price of gold will average $1,500 per ounce for the year and the price of copper will average $3.5 per pound for the rest of the year, while these are averages, the way gold is currently trending the company’s earnings predictions could be due for a serious downgrade.


Gold miners are being trapped by rising costs and falling commodity prices. This unfortunate trend is sending profits lower and while this is happening, investors should steer clear from gold miners.

The price of gold is not really based on supply and demand. The gold price currently has a greater correlation to Fed policy more than anything else. So, as they cannot set the price of the commodity they sell, gold miners are stuck, they cannot raise the price of their mined gold in order to offset rising production costs, so earnings are unpredictable and if the price of gold falls much further, miners will rapidly become unprofitable.

Overall, with costs rising and the price of gold falling, investors should keep away from miners and look elsewhere for deals.

Fool contributor Rupert Hargreaves has no position in any stocks mentioned. The Motley Fool owns shares of Freeport-McMoRan Copper & Gold.

The article Falling Gold Prices are Starting to Hurt Miners originally appeared on

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