Spot gold gained 13% in 2023 and so far this year, is up 6%. Thursday March 28, gold ended the day at $2,233.00 oz, a strong performance given the headwinds facing the precious metal.
Large-cap gold mining stocks, represented by the VanEck Gold Miners ETF are down 2% over the past year; junior gold miners’ stocks, represented by the VanEck Junior Gold Miners ETF are down 1.17% over the same period.As the chart below shows, the PHLX Gold/Silver Index , a grouping of 30 gold and silver mining companies, is below where it was three years ago.
Tech stocks and more recently, those with a focus on artificial intelligence, have gobbled up a large amount of investment capital that previously went into gold equities. shares are being disposed of despite the fact that they are trading at significantly better multiples than the technology stocks.Historically, junior explorers and developers might trade at $60 an ounce and as you make more progress, you get up to $200 an ounce.
Because historically, gold mining stocks have performed well following periods when they have significantly trailed bullion. The divergence may have already begun. Hulbert points out that over the past month through March 20, the XAU index gain has been double that of gold, 12.5% versus 6.3%, respectively, leading to his bottom-line conclusion:
Jeff Clark, founder of TheGoldAdvisor.com, wanted to know what happens to gold and gold stocks during periods of monetary easing. Looking back at 11 such periods since the 1970s, Clark found that in nine of those periods, the gold price rose. If the Fed lowers rates, the dollar will weaken, as it has done in the past during monetary easing. Commodity and precious metal prices have an inverse relationship with the dollar; a lower dollar typically means higher commodity/ gold and silver prices.Copper is used in a plethora of manufacturing processes, so commodity analysts keep a close eye on economic growth and manufacturing to get an idea in which direction copper prices are headed.
With treatment and refining charges near zero, smelters have been forced to cut production, reducing refined copper supply. , in early March, 19 companies agreed to cuts via maintenance outages, lower output rates, and delays in new operations. According to the International Energy Agency , to keep the world on a path to net zero carbon emissions, copper must rise from 25 million tons to 35 million tons by 2030.Copper is essential to the energy transition from fossil fuels to electrification and decarbonization.
The case for copper, gold, silver, and all commodities, rests upon the US dollar. Once the Fed starts cutting interest rates, the dollar will weaken and the entire commodities complex will strengthen. Any AOTH/Richard Mills document is not, and should not be, construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment.
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