I do not know yet why gold prices (it reached an all-time high of US$640/oz) soared substantially, just last week. Is there a sudden industry demand (semiconductors and electronics?) in the manufacturing sector for gold? Is the jewelry sector experiencing a boom? Are Central Banks around the world in short supply of gold? I don’t know. I suspect fears of the impasse of over the nuclear standoff in Iran which spilled over to oil prices skyrocketing to unprecedented levels, are driving investors to seek safe investment havens. The band-wagon mentality simply took over. Correct me if I’m wrong, as I do not pay too much attention to mining issues. However, if the surge in prices isn’t supported by fundamentals but by perception, then there might be a correction soon, especially if the Iran nuclear issue gets diffused.
Here in the Philippines, which is a major gold producer, mining stocks rose substantially on the back of sky-high global prices. In fact, the mining and oil index surged a spectacular 45%++ month-to-date, with Philex B (+50%), Manila Mining B (21.4%), and Lepanto B (59.3%) all advancing steadily. But, Philex seems the only one with fundamentals that can justify the rise in its share price. Lepanto and Manila Mining, in particular are saddled with labor strikes and hedging conflicts with its foreign clients. Moving forward, mining and oil-related issues will continue to dominate the market as developments in the global front, as well as the government's determination to resurrect this neglected, although controversial sector (which was given a boost by the recent Supreme Court ruling upholding the Mining Act of 1995, setting on alarm bells for environmentalists but giving the green light signal to mining investors) only means this index will surely be among the most interesting indices in the years to come.
Here in the Philippines, which is a major gold producer, mining stocks rose substantially on the back of sky-high global prices. In fact, the mining and oil index surged a spectacular 45%++ month-to-date, with Philex B (+50%), Manila Mining B (21.4%), and Lepanto B (59.3%) all advancing steadily. But, Philex seems the only one with fundamentals that can justify the rise in its share price. Lepanto and Manila Mining, in particular are saddled with labor strikes and hedging conflicts with its foreign clients. Moving forward, mining and oil-related issues will continue to dominate the market as developments in the global front, as well as the government's determination to resurrect this neglected, although controversial sector (which was given a boost by the recent Supreme Court ruling upholding the Mining Act of 1995, setting on alarm bells for environmentalists but giving the green light signal to mining investors) only means this index will surely be among the most interesting indices in the years to come.
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