Is Anyone Still Interested in Gold?

The poor performance by miners has led to very low sentiment in the sector. In an environment of rising mining costs, Bank of America even claimed that a hypothetical drop of gold to $1,000 per ounce could make half of the gold industry worthless, according to WSJ.

Even so, a decline across the board has not deterred executives and officers in the industry. The S&P/TSX Global Gold Index, which includes large miners such as Barrick Gold, Goldcorp, and Newmont Mining, has declined about 25 percent over the past year. However, it now has seven miners with insider buying for every one with selling, according to INK Research. This represents a near doubling of the ratio from the beginning of the year.

Ted Dixon, chief executive officer of INK Reserach, explains, “That is the type of insider buying we saw in the broad market during the height of the great financial crisis in late 2008 and early 2009. A similar situation now seems to be in place among gold and silver miners.” He continues, “With both fundamental and technical conditions supporting recent heavy insider buying, it looks like a significant bottom in precious metals mining shares may be in the process of forming now.”

Demand for bullion rises…

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