Unbelievably, there are only 11 shares from the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) cohort that are trading in the black today, and they’re mostly gold miners.
Indeed, it was a shocking night for equity markets around the world and it could have been even worse if it wasn’t for a late rally on Wall Street. However, the ASX 200 itself has also plummeted more than 2%, dragging almost everything lower in the process.
In times of uncertainty, investors can tend to turn to the ‘safety’ of gold, which has not coincidentally risen to US$1,193 an ounce – its highest price since June 2015 – from a low of US$1,050 an ounce in mid-December.
The higher gold price, combined with the weaker Australian dollar (which is currently fetching around US 70 cents), are both good for Australian gold miners. Because the gold price is quoted in US-dollar terms, it allows the miners to recognise a higher selling price for their product, helping to boost revenues and overall earnings. It seems investors are confident the recent bout of market volatility could send the gold price even higher.
Despite the heavy falls being experienced by the broader market, the S&P/ASX All Ords Gold (Index: ^AXGD) (ASX: XGD), which tracks the country’s gold producers, has risen an impressive 6.9% while it has heavily outperformed the ASX 200 over the last two-and-a-bit sessions.
Driving it higher today has been these shares:
- Newcrest Mining Limited (ASX: NCM) share price is up 7.2%
- Northern Start Resources Ltd (ASX: NST) share price is up 7.6%
- EVOLUTION FPO (ASX: EVN) share price is up 6.7%
- Regis Resources Limited (ASX: RRL) share price is up 9.7%
- Beadell Resources Ltd (ASX: BDR) share price is up 1.2%
It’s certainly tough in the market right now, and some investors will be tempted by the lure of gold or the miners themselves. That strategy could work, but if the gold price does retreat it could also result in heavy falls across the sector.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th
Motley Fool contributor Ryan Newman has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. You can follow Ryan on Twitter @ASXvalueinvest.
The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
- Coronavirus (COVID-19): 6 charts every Australian needs to see – April 6, 2020 1:46pm
- Innovation through crisis – April 2, 2020 11:48am
- Coronavirus (Covid-19): Why Is Italy’s Fatality Rate So Bad? – March 26, 2020 3:39pm