Gold, once negative for 2020 is now positive for the year. But it’s not gold’s fault, blame things on COVID-19. The precious metal, once a safe haven, sold off as investors had to sell their gold assets to pay for losses in the stock market
In March, the US equity markets have had their worst weekly decline since the 2008 global financial crisis. That week was highlighted by back to back 1000 point losses for the DOW and the biggest single-day point drop in history at the time. Yet gold price sell $50 that Friday.
But now gold is a safe haven again…thanks to COVID-19. As countries when on lock down, non-essential jobs when idle, of which gold refiners were knocked offline. This was right when demand for gold surged. The were so much demand, but no supply and what supply existed couldn’t be moved because the airlines started grounded their planes.
Gold prices are now at an eight year high at over $1700. But what if COVID-19 becomes harder to contain?
Singapore made quick and decisive moves to contain the spread of COVID-19. The measures that Singapore took was praised by many countries around the world. After containing COVID-19, as easing their lockdown restrictions, Singapore is seeing a resurgence in cases with the highest record daily number of people infected on this past Thurs.
So what does this mean for gold? Well, if countries continue to struggle with containing COVID-19, to ward off recessions/depressions, central banks will continue to print fiat.
Peter Grosskopf, chief executive of asset manager Sprott believes prices will continue to rise due because of debt levels around the world. And Peter thinks, an opportunities in the gold-mining space offers a great hedge if equity markets continue to decline.
Newmont Mining Corporation, operates in the mining industry. The company primarily acquires,develops, explores for, and produces gold, copper, and silver. Its operation and/or assets are located in the United States, Australia, Peru, Ghana, and Suriname.
Shares of Newmont Corp. NEM, +13.41% soared 11% toward a 7 1/2-year high in afternoon trading Thursday, after J.P. Morgan called the gold miner a "rare find" in an industry that can often struggle to replace reserves. Analyst Tyler Langton initiated coverage of Newmont with an overweight rating $61 stock price target, which is about 9% above current levels. "[Newmont] should generate strong free cash flows at current gold prices and still fund its healthy dividend (2.0% yield), sustaining [capital expenditures] and development capex even at $1,200/oz. gold (vs. $1,650 currently),"
The chart suggests in the short run look for Newmont Mining to move higher to the weekly supply zones.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
I recently added some gold producers to my portfolio and expect them to rise higher too. Also they have good dividends.
@clm great point and good move as I believe Newmont has a 2% dividend yield.