Most gold miners are down today.
At time of writing, Evolution Mining Ltd’s [ASX:EVN] share price has dropped by 3.64%. Saracen Mineral Holdings Ltd’s [ASX:SAR] shares have dropped by 3.21%, Northern Star Resourced Ltd’s [ASX: NST] by over 1%, and Newcrest Mining Ltd [ASX: NCM] is also down by 2.02%.
Why are gold miners down today?
One factor that could be hitting miners is the increasing tensions between China and Australia. Australia has quite a close trading relationship with China. In particular for gold, with 37% of Australia’s gold exports go to Hong Kong and 31% to China.
Another factor could have to do with the fact that gold prices in US dollars have fallen back to US$1,800 an ounce today after reaching a high of US$1,818 this week. Gold prices may have dropped, but they are trading at the highest prices we have seen since 2011.
In US dollars, gold has so far returned 18.91% for the year.
Gold prices are also increasing in Australian dollars, with gold trading at close to US$2,600 an ounce at time of writing. In Australian dollars, gold has returned 19.82% year-to-date.
What could happen next?
Even with all the uncertainty around, there’s a lot of optimism in the markets. Mainly because there is the idea that central banks will keep providing an unprecedented amount of money to support the economy, even as the real economy sputters.
But the pandemic is still hitting the global economy, we are seeing higher counts of cases and it’s starting to dawn that the recovery won’t be as quick as expected.
These are some great reasons to have some gold in your portfolio.
One way to get exposure to gold is through buying gold directly. Another is through gold stocks, like gold miners. These can be very rewarding, but also risky.
It’s why The Rum Rebellion’s editor Greg Canavan has prepared a guide on ‘How to Pick Winning Gold Stocks’.
You can access Greg’s free report here.