By looking at companies that mine gold
and other raw materials, you can infer that the cost of revenue will not change with the price of gold
and other raw materials. This is because no matter what the price of gold/ raw materials is, the cost to mine and refine the gold
will also stay consistent. Now if you look at the cost of merchandise you can expect these companies to profit because the unit cost of gold
will go up as gold
prices rise. Therefore, rising the the cost of goods sold while the operating costs remain consistent. This idea could also be implemented when looking at companies that mine and refine other raw materials. Because it is easier to predict the price of gold
, it will be easier to anticipate what these companies will do.