Northern Star Share Price Jumps 7% As Gold Price Climbs (ASX:NST)

It’s been a good day for gold miners.

Shares for Northern Star Resources Ltd [ASX:NST] are up 7.61% at time of writing. Newcrest Mining Ltd [ASX:NCM] also had an increase up 6.72%, Saracen Mineral Holdings Ltd [ASX:SAR] is up by 5.76% and Gold Road Resources Ltd [ASX:GOR] surged 5.37%.

Spot gold prices in US dollars increased, hitting US$1,738.70 at close yesterday.

Gold prices climbed after the US Federal Reserve left interest rates on hold

During their June Federal Open Market Committee meeting, the Fed left rates the same at a low 0-0.25%. In fact, as Fed’s chairman Jerome Powell said during the press conference, the Fed isn’t looking to raise rates for a while:

So we’re not thinking about raising rates. We’re not even thinking about, thinking about raising rates.

According to the economic projections released by the Fed, interest rates could stay put until 2022.

Powell also vowed to continue supporting the economy through unconventional programs until confidence and employment recover. As Powell said:

We will continue to use these powers forcefully, proactively and aggressively until we’re confident that we are solidly on the road to recovery. When the time comes, after the crisis has passed, we will put these emergency tools back in the toolbox.

And while the last May unemployment came out better than expected, the Fed doesn’t expect a quick recovery. Looking ahead, the Fed believes the US economy will end the year with unemployment at a high 9.3% and a 6.5% drop in GDP.

Whenever the economy’s outlook turns bleak, investors jump into gold.

Aussie gold miners are benefitting from double whammy

Aussie gold miners are gaining from higher prices after the Fed’s meeting but also because at the same time the Australian dollar lost ground against the US dollar.

Gold is priced in US dollars, so when the price of the Aussie dollar moves down against the US dollar, Aussie gold investors will get some extra money from the falling exchange rate.

Gold expert Jim Rickards expecting gold prices to hit US$10,000 in the next years. In a recent exclusive video interview with Rum Rebellion’s Editor Greg Canavan, Jim explains why.

To watch this free interview, click 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.

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