24/7 Wall St.

The zany world of gold continues to surprise to the upside in 2016, peaking briefly just above $1,300 per ounce on the week ending May 6, 2016. After closing at roughly $1,288 on Friday the year-to-date rage onward and upward had gold up more than 21% measured by the SPDR Gold Shares (NYSEMKT: GLD).

There are of course reasons for gold’s surge so far in 2016. Still, one has to ask whether there has been too much of a good thing, if not for the shiny yellow metal itself, then perhaps in the gold miners.

24/7 Wall St. tracks many analyst upgrades and downgrades each day, to the tune of hundreds per week. Most analysts in 2016 have adjusted their analyst ratings and price targets up for the key gold miners during the 2016 rally.

Many of the gold miners have seen their shares rise massively in 2016. Does a rally of 83% since the end of 2015 in the VanEck Vectors Gold Miners ETF (NYSEMKT: GDX) explain that perhaps things could be getting overheated in gold miners?

Some analysts are now starting to fear that the run has been too much. Many of the gold miners are now trading well above their consensus analyst price targets. That is even after those targets have by and large been raised in recent weeks, and again, most analysts are still raising their price targets.

Investors in gold miners are not just investing in gold. It has been a leveraged gold bet in 2016 so far. But investors in gold miners and producers also have to know that they are taking on country risks, geopolitical risks, currency risks and individual company execution risks.

24/7 Wall St.
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