At time of writing, a host of ASX gold stocks are up. This includes gold giant Northern Star Resources Ltd [ASX:NST].
After a steep fall between July and November, the Northern Star share price has been climbing back up:
Where do markets go from here? Are ASX gold stocks back in vogue? Some very strange things are afoot in the market — we take a look at the gold price and look to the future.
Gold price went sideways — now it’s dragging ASX gold stocks like Northern Star back up
After going sideways between August and December, you can see the gold price is now hovering just shy of US$1600 below:
It got a firm bounce leading into the new year and this translated into a higher share price for Northern Star.
Today, as the ASX slides on coronavirus fears, you can see the top five ASX 200 stocks today are all gold miners:
What’s going on here?
Our editor-in-chief, Greg Canavan recently caught up with US gold expert Jim Rickards to talk about the truth behind the recent rise of the gold price in Australia. Click here to watch.
Two options for playing the market emerge, follow the Fed into equities or go for slow and steady gold
We all know gold is the safe haven metal — doesn’t matter if you are a survivalist or not.
No counterparty, store of value — you’ve heard it all before.
I think as bad as the coronavirus is, the world is quite good at containing epidemics.
You only need to look at past outbreaks — swine flu, MERS, SARS, the world usually finds a way to move past these relatively minor hiccups.
So today’s action on the markets is more like a wakeup call.
The Federal Reserve has plenty left in the barrel with the interest rate currently sitting at 1.75%.
It doesn’t sound like much, but with Europe (ECB) and Japan doing very strange things with their interest rates, this could mean gold is in for a more sustained run.
All roads seem to lead to more Fed rate cuts, riskier bets on equities throughout 2020 (globally) with gold waiting in the wings.
As a result the Norther Star share price, along with its other ASX gold stock peers, could benefit.
With the gold price already getting a firm bounce, a bit of sideways movement is also on the cards.
Unless the coronavirus really takes off, of course. Then gold stocks are definitely going to be back in vogue.
All of this means gold could now be a safer bet if you favour a more passive approach to investing.
Watch 2020 unfold knowing things are working in golds favour.
Or you could buy a big ETF and shave off whatever the Fed decides you should get.
Bottom line — look beyond the headlines and figure out what your risk appetite is.
For The Rum Rebellion
PS: The RBA is now considering negative interest rates. Click here to watch our interview with US economist and gold expert Jim Rickards.