Gold Mining Industry research paper due and no idea how to lay it out? We suggest beginning by discussing relationship between the gold price and performance of gold-mining stocks
Instructions for Gold Mining Industry Research Paper:
- Part 1: Introduction to Gold Mining Industry Research Paper
- Part 2:
- Background on gold as a commodity.
- History of the gold market – discuss the enormous fluctuations in the gold price in the past fifty years.
- Background on the metals and mining sector.
- And the importance of gold in America, and globally. Key definitions.
- Part 3
- What factors influence the spot price of gold?
- What conditions make the price of gold rise? (look at: current-account, trade, government debt, valuation of equities, international politics) Historic returns and price fluctuations.
- Part 4:
- Background on the gold mining industry.
- Who are the big players?
- Where are they located?
- Who are the consumers?
- How do gold mining companies make money?
- What are the costs of production?
- Do the costs vary from country to country?
- What influences the price of gold mining stocks?
- Since gold is denominated in US Dollars, discuss the impact and risks (such as currency risk) on the performance of foreign gold-mining stocks vs. domestic ones (USA).
- Describe the status quo of how companies that (foolishly) did not choose to hedge against spot price/currency risk are suffering poor stock price performance, even though the price of gold is rising. For example: South African gold mining stocks.
- Part 5: Investing in gold:
- What are the vehicles for investing in the gold industry/market (pros and cons of each) ?
- Metals and mining stocks
- Purchasing actual gold
- Derivatives, ie. Futures. - Discuss gold as a commodity, as well as a currency
- Describe gold as a great “inflation hedge” for investors. What does that mean?
- Discuss how if the rate of inflation is greater than the Fed Funds rate, then we have a situation where it doesn’t pay to own US government T-bills, so people invest in gold, even though there are risks involved. (Include current figures – gold has gone up around 50% in the past couple years – that’s a great return on investment!)
- Give examples
- What are the vehicles for investing in the gold industry/market (pros and cons of each) ?
- Part 6: Relationship between the spot gold price and performance of gold-mining stocks
- Discuss past research
- What has history shown? Give examples
- Empirical Research – correlations?
- Part 7: How do the prices of gold-mining stocks move with changes in the spot price of gold? Do they correlate at all?
- Discuss the price of gold as an issue, as well as the importance of management (executive decisions, mangers …etc) of gold-mining stocks: hedging decisions and foreign exchange risk.
- Give examples
- Part 8: Conclusion(s)