Gold Hits Record High as Mining Shares Outperform

Gold has reached a new record this week, passing $3,500 an ounce for the first time. At the same time, gold mining shares are rising faster than the metal itself, something not seen in this cycle until now.

Mining companies benefit more when gold prices rise because of their high fixed costs. Higher prices boost their profit margins, and recent lower input costs have helped. Shares in gold miners only started to climb this year despite steady growth in cash flow.

Still, some investors remain cautious. Gold is seen as a safe hedge against market risks, while mining shares are still part of the stock market. Others doubt whether miners will use profits wisely, pointing to a poor record of returns in past cycles.

Analysts say that if gold stays near current levels, miners will remain highly profitable. Exchange-traded funds like iShares Gold Producers or Van Eck Junior Gold Miners offer ways to follow the trend, though experts warn the sector is better for short-term gains than long-term holdings.

Kursiv Uzbekistan also reports that Gold could climb close to $5K an ounce if the Federal Reserve’s independence is undermined and investors transfer even a small share of their Treasury holdings into gold, according to Goldman Sachs.