Mining shares warning issued

<p>Investors ought to reconsider buying shares in mining companies.</p>

The price of gold means that there is no reason to currently buy shares in mining companies, according to a market strategist.

Chris Gaffney, a senior market strategist for EverBank Financial Corp, explained how the value of the precious metal is the most important factor, regardless of how well a firm is performing.

Speaking to International Business Times, he advised investors to wait and see if the price of gold is going to rise before buying stocks in mining companies.

"Not until we start to get a tick back up in gold, do … you start moving back into the mining sector," said Mr Gaffney, who described stocks such as AngloGold Ashanti Limited and Barrick Gold Corp as being "volatile".

Gold traditionally rises in times of economic crisis, but as world economies recover from the recession, the value of the precious metal has slipped.

The Swiss National Bank recently announced that from January to September it recorded a consolidated loss of 6.4 billion Swiss francs (£4.39 billion), which it said was partly because of the falling price of the commodity.

Find out about commodities trading and learn CFD strategies at City Index

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.