Since gold touched its recent lows of $1,200/ounce at the end of June, the gold price has rallied over 10% to nearly $1,340/ounce. While the gold price is still a far cry from the levels seen in late 2012, it looks like some share market participants see value at current levels.
The rise in the gold price has put a rocket under gold miners today. While the broad S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) is up 0.3%, gold stocks are faring much better. Of the top 10 gainers in the index today, five are gold miners: Sirius Resources (ASX: SIR) is up 14%, Evolution Mining (ASX: EVN) is up 6.9%, Newcrest Mining (ASX: NCM) is up 6.4%, PanAust (ASX: PNA) is up 4.5% and Kingsgate Consolidated (ASX: KCN) is up 4.4%.
Given the inherent leverage most gold miners have to a higher gold price, and considering the significant declines this calendar year in share prices (many over 40%), it is perhaps not surprising that gold miners are starting to see some support.
Foolish takeaway
While investing with a contrarian mindset certainly has its benefits, investors should also not forget how unpredictable the gold price can be.
Interested in our #1 dividend-paying stock? Discover The Motley Fool's favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of "The Motley Fool's Top Dividend Stock for 2013-2014."
More reading
- Like CSL's 1388% return? We're looking for the next biotech star
- Three ways to profit from a rise in oil prices
Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.
