Gold Miners’ Share Price Up Today, ASX: SAR and ASX: NST

Gold miners Saracen Mineral Holdings Ltd [ASX:SAR] and Northern Star Resources Ltd [ASX:NST] are up 4.05% and 1.38% respectively today at time of writing.

What happened?

A bunch of bad news rattled the markets.

First, tensions are building up between the US and China ahead of their trade talks this week.

The US blacklisted eight Chinese technology firms after blaming them of human rights violations.

The US also banned the visas of Chinese officials related to Muslim detentions in the  Xinjiang region.

This comes after Bloomberg reported on a discussion in the White House about stepping up the trade war by limiting US government pension investments in Chinese stocks.

Investors are quickly losing hope that both nations will be able to reach a trade agreement.

On other news, after a brief period of trying to normalise the economy by hiking interest rates and decreasing their balance sheet, the US Federal Reserve announced they intend to once again start increasing their balance sheet.

And closer to home, Australia’s consumer confidence took a nosedive as consumers are increasingly worried about the future of the economy. The Westpac-Melbourne Institute Index of Consumer Sentiment dropped by 5.5% to 92.8 in October from 98.2 in September.

Westpac’s Chief Economist Bill Evans, said in a press release:

This is the lowest level of the Index since July 2015. The Index has fallen by 8.4% since the Reserve Bank started cutting rates in June and is down by 8.6% over the last year.

The fall comes despite a further 25bp cash rate cut from the RBA at its October meeting — the third rate cut since June taking the cash rate to a new historical low of 0.75%.

While gold prices have only edged slightly higher, remember, gold is seen as a hedge.

All this could be good for gold prices.

What could happen next for gold?

The World Gold Council reported yesterday that more money is moving into gold ETFs:

In September, global gold-backed ETFs and similar products had US$3.9bn of net inflows across all regions, increasing their collective gold holdings by 75.2t to 2,808 tonnes(t), the highest levels of all time. Holdings surpassed late 2012 levels, at which time the gold price was near US$1,700/oz, 18% higher than current levels.

In the last year gold prices have climbed 25.89%. With the trade war escalating and concerns on the global economy, gold prices could move higher as investors start moving away from risk and jumping into gold.

In an exclusive interview with Greg Canavan, gold expert Jim Rickards explains why he expects gold prices could hit US$10,000 in the next years. You can watch the video here.

Selva Freigedo 

Selva Freigedo is a research analyst for The Rum Rebellion.

Born in Argentina, her passion for economic analysis started at a young age. Her father was an economist for the Argentinean governments and the family used to discuss politics and economics at the dinner table.

Argentina is a country with an unusual economic history. Growing up there gave Selva first-hand experience on different economic phenomena such as hyperinflation, devaluation and debt default.

Selva has also lived in Brazil, Spain and the USA.

Back in 2000 she was living in the US as the dot com bubble popped…
And in 2008 she was in Spain as the property market exploded and then collapsed…

She has seen first-hand what happens when bubbles burst.

Selva joined Fat Tail Investment Research’s team in 2016, as an analyst. She now writes from her vantage point in Australia, where she settled in 2015.

The Rum Rebellion