Gold Digger: Has gold lost its spark? Probably not
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On August 12 the gold spot price plummeted 5.7 per cent – the biggest one day drop in over seven years.
This had an immediate impact on investor sentiment with just 27 per cent of the stocks on our list — or 47 companies — registering gains over the last week.
But don’t stress.
Experts are calling this a small ‘correction’ to gold’s bullish run, rather than the beginning of a more bearish trend.
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In this post, respected resources analyst and founding director of MineLife Gavin Wendt says this week’s tumble should be put into perspective.
“One session of retracement does not take away from gold’s overwhelmingly positive thematic,” he says.
“Gold’s rise did not start with COVID-19 — it began five years ago when it was trading at around $1,050 per ounce (almost doubling since then), with another price upleg from August 2018, when gold was trading around $1200 per ounce.”
It’s risen 66 per cent over the past two years, driven by question marks over the world economy, Wendt says.
“Fast forward to the present, when you combine a global health crisis with an economic crisis, you have a double-whammy that provides enormous uncertainty for authorities and governments, and their ability to deal with the consequences,” he says.
“Bear in mind that during the last crisis – the GFC – gold didn’t hit its peak until three years later, so there’s a lot more upside left in gold.”
Here’s how 173 ASX-listed gold stocks performed for the period August 10–14 [intraday]:
Scroll or swipe to reveal table. Click headings to sort. Best viewed on a laptop:
Copper-gold explorer Alicanto Minerals (ASX:AQI) appeared on investor radars earlier this month when certified company maker Ray Shorrocks joined the board .
This week the company announced a new drilling campaign at the Greater Falun project in Sweden, starting in September.
“I guarantee I would not have joined this board if we were chasing 200,000oz deposits,” he says. “We are looking for the high-grade, big tonnage stuff here.”
The funds will be used to explore the company’s recently acquired and historically underexplored gold projects in the red hot Lachlan Fold Belt in NSW.
And notable investor Stephen Copulos has picked up an 8.37 per cent stake in WA-focused microcap Aruma Resources (ASX:AAJ).
Copulos is best known for his holdings in Myer (ASX:MYR) and New Zealand-listed fast food play Restaurant Brands.