Gold Miners May Need an Elimination Round Before a Comeback

Gold is struggling to make a comeback after the worst price slump in three decades. Jewelry buyers are still questioning if the yellow precious metal can hold value in the future. Even consumers in India, who traditionally have a strong attachment to gold, are standing by. Miners were faced with a massive write off and Fidelity believes a painful elimination round is what the industry needs. Joe Wickwire, who manages the Fidelity Select Gold Portfolio, thinks the weaker gold mines should just close. He said, "It's part of the life cycle of industries that every so often you need to have a cleansing of that which is not working. I do believe the gold industry is in the process of consolidating." Wickwire urges gold producers to set less lofty goals, make more conservative projections and focus on the quality of the mines. We may not know when consumers will favor gold again, but the miners with a good reserve will be the first ones to recover. Gold has been moving around $1,300 per ounce in the past year.