Just because a fisherman is targeting swordfish with his long-line doesn't mean he'll bemoan the snaring of some mako sharks along the way.
Out on the water, that's known as bycatch. In the mining world, its by-product, and investors are advised to pay close attention to it while assessing investment opportunities among all sorts of miners.
Since copper and gold are commonly found in association with each other, gold miners have varying degrees of their fortunes tied up in the outlook for the red metal.
Copper's impact can best be seen through production costs. Under the circumstances, Newmont recorded an acceptable cost of $477 per ounce of gold when you ignore copper by-product. Since the company's new Boddington mine in Australia has encountered significant challenges during ramp-up, pressing costs there up to $617 per ounce for the quarter, Newmont is feeling the competitive pressure from rivals like Goldcorp
But when you apply Newmont's consolidated copper production as a by-product to the cost basis for gold production, we find that despite its challenges, Newmont remains near the top of its class. It boasts a by-product cost applicable to sales of just $195 per ounce of gold. That's not enough to oust Yamana Gold
If copper continues to join gold in this multiyear march toward higher nominal prices, copper-heavy producers such as Yamana and Newmont are bound to enjoy a good deal more of the margin expansion we've observed throughout this year. For Fools who anticipate larger percentage gains in copper prices than in gold, primary copper plays like Freeport-McMoRan Copper & Gold
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 62 potential investments, and you'll find Christopher's comments on most of them.
Fool contributor Christopher Barker lost his silver coin that read: "Honest value never fails." He can be found blogging actively and acting Foolishly in the CAPS community under the username TMFSinchiruna. He tweets. He owns shares of Freeport-McMoRan Copper & Gold and Yamana Gold. The Motley Fool's disclosure policy is 0.999 pure.
True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.