Gold prices are on a roll, moving close to their 2011 record, boosted by everything from the coronavirus pandemic to minuscule interest rates.
Gold recently traded at $1,892 an ounce, up 25% year to date, and is moving toward the all-time zenith of $1,921.
That surge has boosted gold mining stocks, such as Newmont (NEM) - Get Report and Barrick Gold (GOLD) - Get Report. Newmont has soared 53% year to date and is up 1.5% Thursday, to $66.46. Barrick has climbed 52% year to date and is down 0.4% at $28.41 Thursday.
The pandemic helps gold because it’s wreaking havoc with the global economy, and the precious metal is seen as a safe haven in times of economic and financial turmoil.
Rising global political tensions also are aiding gold, again because of the safe haven effect.
Lower interest rates can boost gold, because they lessen the attractiveness of fixed-income investments in comparison to gold. The precious metal, of course, doesn’t pay interest rates or dividends, though many gold mining stocks do pay dividends.
The dollar’s drop to a six-month low, as measured by Bloomberg’s Dollar Spot index, also is lifting gold. The currency move makes gold cheaper for foreign investors.
Ironically, gold often weakens when stocks are rising, because rising stocks often indicate a buoyant economy. But that’s obviously not the case this time around.
Some heavy-hitting investors, such as Ray Dalio, Jeffrey Gundlach and Paul Tudor Jones have talked up gold in recent months.
Other market analysts and investors are bullish too. “There are a lot of reasons why we think gold is a prudent place to put some money,” Ellen Hazen, a portfolio manager at F.L. Putnam Investment Management, told The Wall Street Journal.