Why You Should Be Watching the Gold Price — Gold Moving Up

Have you noticed? Gold prices are getting close to hitting a milestone: US$1,800 an ounce.

At time of writing, gold is trading at US$1,793. The last time gold was this high was back 2011.

The excitement for higher gold prices is already reflecting on gold miners’ shares.

At time of writing, Gold Road Res Ltd [ASX:GOR] is up by 4.13%, Northern Star Resources Ltd [ASX:NST] is up by 6.10%, Saracen Minerals Holdings Ltd [ASX:SAR] is up by 2.67% and Silver Lake Resources Ltd [ASX:SLR] is up by 3.17%

What’s going on with gold?

Well, the idea of a V-shaped or quick recovery is fading…fast. Cases are spiking in places like the US and India and some places are going back into lockdown.

One of the factors that drives gold prices up is fear. All this uncertainty and the realisation that we’re not going back to normal anytime soon is pushing people to reduce risk and into cash and gold.

There is also the fact that governments are flooding the system with money and increasing debt to fight the coming recession. The worry here is that all of this will create inflation.

While many are dismissing these concerns, in 2008 these same measures created asset inflation.

Now, these unprecedented and unconventional measures are happening at a much bigger scale…and we have no idea what the economic consequences will be.

On this point, check out Dan Denning’s new report ‘Crisis Money Guide’, where he explains how a currency crisis could unfold suddenly, and gives you some cash alternatives. You can access this FREE report here.

So far though, one of the outcomes of these unconventional policies has been low interest rates…which is good for gold. You see, one of the criticisms gold always gets is that it has no yield. Yet with interest rates at close to zero or negative, gold becomes more appealing.

What’s next for the gold price?

There’s been a lot of excitement about gold this year from investors and gold explorers as prices keep climbing.

So far, gold has already delivered an 18.29% return this year in US dollars.

But gold is also moving higher in Australian dollars. At time of writing, gold is trading at AU$2,583.56 an ounce and has returned 19.49% year-to-date in Australian dollar terms.

With so much uncertainty around, we are likely to see gold prices climbing higher in the future.

One way to get exposure to gold is through owning gold directly. Another is through gold stocks. But it’s not easy to pick the winners…

Check out Greg Canavan’s free report on ‘How to Pick Winning Gold Stocks’.

You can access it here.

Best,

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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