Saracen Mineral Holdings Limited [ASX:SAR] is up close to 7% today at time of writing. The SAR share price has increased from $3.88 to $4.15.
Saracen is an ASX gold producer with operations in Western Australia. The company has a $4.28 billion market cap.
Why is the Saracen share price up?
It’s not just Saracen.
Gold miners are trending upwards today because of the gold price.
In the last couple of days, the gold price has increased around US$55 per ounce. The price of gold is now sitting at US$1,644 per ounce and AU$2,489 at time of writing.
As the coronavirus keeps spreading, central bankers are also taking action.
This week, the Reserve Bank of Australia decreased interest rates to a record low of 0.50%.
In a surprise move, the US Federal Reserve also cut interest rates in hopes of keeping the economy going. Fed chairman Jerome Powell had this to say on the move:
‘We do recognise a rate cut will not reduce the rate of infection, it won’t fix a broken supply chain. We get that. But we do believe that our action will provide a meaningful boost to the economy. More specifically, it will support accommodative financial conditions and avoid a tightening of financial conditions which can weigh on activity and will help boost household and business confidence.’
There are some things that affect the price of gold.
One of those things is central bank monetary policy. Gold does well in an environment when rates are moving lower as it increases the expectation of inflation.
Gold prices also feed on uncertainty.
What happens next for SAR?
Saracen has been on a quest for growth.
Their ‘Flight to 400’ plan aims to increase gold production to 400,000oz per year from 2021 from its two mines in Western Australia: Carosue Dam and Thunderbox Operations.
The company also announced last year they would acquire a 50% stake of the Super Pit gold mine. The Super Pit gold mine is one of Australia’s largest gold mines.
Truth is, with gold prices rising, it’s a good time for gold.
Gold expert Jim Rickards expects gold prices to hit US$10,000 in the next few years. In a recent exclusive video interview with The Rum Rebellion’s editor Greg Canavan, Jim explains why.
For The Rum Rebellion