Did you catch the latest high?
While most of us were sleeping last night gold hit AU$2,380 per ounce. That’s its highest level ever in Aussie dollars. Up 34% since last April, when one ounce was worth a paltry AU$1,775.
It’s since slipped a touch. At time of writing one ounce of gold will fetch you AU$2,359. Still, a tidy 33% gain since April if you’re holding onto physical bullion or a gold ETF. And potentially much more if you’ve invested in the right gold stocks.
Why the new record high gold price?
Largely the same reasons that supported gold’s resurgent bull run in the latter months of 2019.
Demand remains strong. Both from central banks seeking to bolster their non-fiat currency reserves and distance their governments from the US dollar. And from retail investors lured by gold’s haven status. A status bolstered by the current fears over the spreading coronavirus.
Meanwhile new global supply remains tight. A situation Rum Rebellion editor Greg Canavan expects to continue into the 2020s.
Then there’s the weak Australian dollar. At just under 67 US cents it’s still above the 64 US cent trough it hit in October 2008 during the fallout from the GFC. But well below the US$1.10 peak it reached in July 2011.
That matters because, as Greg reminds us, ‘The US dollar is the world’s reserve currency. Gold’s benchmark global price is in US dollars.’
Regardless of how you feel about the depreciation of the Aussie dollar, it’s certainly paid off for gold. And select gold stocks.
Northern Star Resources, for example, is up 60.0% since 30 April 2019.
Australia’s biggest gold producer, Newcrest Mining is up a more subdued 17.4%.
Then there’s Gold Road Resources. Its share price has gained 55.8% during this same period.
Of course, not all gold stocks will go up…even with a rising gold price. And the smaller end of the sector — the gold explorers — carries even more risk. With the potential for a lot larger gains.
That’s why you should never invest a single dollar until you’ve done all your homework. A great place to start is with Greg Canavan’s free report, ‘How to Pick Winning Gold Stocks’.
You can get your hands on that…for free…right here.