Myrmikan Research: Gold Mining Valuations Ridiculous Again

Gold Mining Valuations Ridiculous Again

Gold shares had another jarring month in June, with the GDXJ gold miners ETF
losing 18.39%, down 28% year-to-date, putting its price well below where it was at the
start of the COVID panic in March 2020. Though unpleasant, such enormous swings
in value are not threats to our investment strategy in the same way that extreme losses
might be to a trading strategy, for example, for which recovery from such losses would be
nearly impossible. The market can mark gold lower, the value of gold mining assets then
go lower, and the companies that own them sink lower still. But the assets themselves
remain physically unchanged, usually improving through development, in fact. When the
gold price recovers, so do the value of the assets, and the values of the companies that own
them.

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