steve

Why Good times are Ahead for Small ASX Gold Miners

“It has been a couple of big months for gold producers – with 15 percent share price gains notched up by the established names, as gold prices start knocking on the door of $1700.

But the share price strength has prompted calls that without the gold price moving higher still, the established producers are now on the expensive side of things.

The good news is that the buoyant times for gold producers – the price in Australian dollars is up by $60 an ounce in the last three months to $1690 an ounce – has yet to filter down to the smaller, lesser-known gold producers. But it’s starting to happen and it looks like it’s shaping up as an early trend in gold equities in 2018.

Investors are no longer cold-shouldering the small producers; stepping up the search for those names which have yet to be re-rated in response to gold’s price strength.

The gold canary is singing, and it could get a lot louder in the second year of the Trump presidency, causing us to wonder whether gold, as the world’s ultimate safe-haven investment, might stretch out its recent upward run to US$1400 an ounce, and beyond.

It wasn’t supposed to be this way in 2018 with rising interest rates seen as a reason for investors to lighten their exposure to non-interest-bearing gold and shift their funds into other asset classes.

Gold, if everything was behaving according to economic theory, would today be under price pressure and falling, not rising.

The answer, in one word, is uncertainty, and lots of it.  Enter Donald Trump.

No one, perhaps not even the man himself, knows what the US President will do, or say next, creating a climate of instability which financial markets cannot tolerate.

 

Impossible as it is to pin each upward lurch in the gold price against a Trump comment, or one of his famous tweets, a pattern can be seen which connects Trump with gold, starting with the way the value of the US dollar has been falling against other major currencies.

So as the year rolls on and Trump keeps tweeting, gold stocks in Australia should rally quite nicely.”

 

 – Steve Bowes &  Stewart McDonald 

GMO Business Brokers & Vertical Events Subiaco

MORE NEWS STORIES

child and adult holding money jar, donation, saving concept

What Is The Cost Of Selling A Business?

What Is The Cost Of Selling A Business? Here at GMO, there is no concrete cost for selling your business. It depends on a selection of variables including the type of business and the work involved. However, Read more
con11

Get To Know Con Mast

Our team are a diverse group of experienced Business Brokers and/or Business Valuers. So much so, that we thought we better introduce them to you so you can get to know them better.   How long have Read more
Tax inspector investigating financial documents through magnifying glass forensic accounting or financial forensics inspecting offshore company financial papers documents and reports.

Business Sale VS. Company Sale: What is the difference?

As a potential business purchaser, buying a company and buying a business may sound similar, however, there are aspects that make the two options quite different. Business Sale When compared to a company sale, a business sale is generally Read more