Mining shares warning issued

Investors ought to reconsider buying shares in mining companies.


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By :  ,  Financial Analyst

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.

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