You don't know how lucky you are. A recent pullback in gold prices has dragged shares of gold miners through the mud, even as earnings results confirm just how profitable these companies will be once this multiyear secular bull market for gold resumes course.
Before earnings season, I pointed to second-quarter strength in gold prices, and range-bound energy costs, as principal reasons to expect rapid margin expansion and inspiring profitability from the world's producers of gold. Even with the handful of hiccups and challenges that always characterize this industry, thus far the miners have delivered the golden goods.
Goldcorp posted record operating cash flow of $382.6 million for the period, and continues to report excellent progress on development projects that are key to the company's aggressive production growth strategy (targeting 3.8 million ounces annually by 2014).
Remember, not so long ago, gold prices themselves hovered below the range of these margins being reported now. The industry has come a very long way in terms of profitability since that infamous gold correction gave investors a serious gut check.
If you agree with this bullish Fool that gold prices are headed substantially higher as major currency woes persist, then you will no doubt appreciate the leverage that these expanding margins will provide. Goldcorp President and CEO Chuck Jeannes said it best: "Our strong financial results in the second quarter demonstrate Goldcorp's continued progression toward a period of sustained cash flow expansion."
This Fool will continue to track the appropriate profitability metrics carefully, while keeping a vigilant eye on the fundamental economic landscape as it pertains to the gold price outlook. In the meantime, curious investors may wish to take a look at compelling value play Yamana Gold's
Gold is a hot topic on the blogs at Motley Fool CAPS. Join the free service today and see just how many Fools are taking the long view when it comes to investing in gold. The "Gold" tag at CAPS lists 55 potential investments, and you'll find Christopher's comments on most of them.
Fool contributor Christopher Barker can be found blogging actively and acting Foolishly in the CAPS community under the user name TMFSinchiruna. He tweets. He owns shares of Agnico-Eagle Mines, Eldorado Gold, and Yamana Gold. The Motley Fool has a disclosure policy.