3 things every gold investor must know today

Will gold keep rising as Newcrest Mining Limited (ASX:NCM) hits three-year highs?

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

ASX-listed gold miners have been killing it in the first four months of 2016, a welcome change after a poor year in 2015. Shares in EVOLUTION FPO (ASX: EVN) are up a massive 29% so far this year, while Northern Star Resources Ltd (ASX: NST) is up a massive 33%.

However before jumping into gold mining shares today, here are three things that you should be aware of:

1. Analysts reckon the gold price could keep climbing

A sample of analysts questioned by Bloomberg think that negative real interest rates will keep investors hungry for gold as an investment in the short term. Negative real interest rates means that inflation is higher than the interest rate you can earn on your cash savings, which erodes your spending power over time.

This is driving demand for gold which is widely regarded as way to protect against inflation.

2. Yes, the price of gold was being manipulated

It's a sad truth that anywhere people are motivated by money, rules will be broken in the name of self-interest. We saw this emerge in various forms after the global financial crisis, we saw it with the rigging of LIBOR interest rates, and now we've seen it in gold.

According to Reuters, Deutsche Bank AG has reached a settlement on a U.S. lawsuit regarding allegations it was involved in price manipulation for gold and silver.

Until recently the price of gold was set by an 'afternoon fix' – a private conference call between big banks which researchers noted showed signs of manipulation and collusion.

3. Newcrest Mining Limited (ASX: NCM) is hitting 3-year highs

Its shares have risen 27% in the last 12 months, while the spot price of gold has risen only 5% in U.S. dollar terms over the same time (although the Aussie dollar is also down slightly over the same period which helps).

Low production costs, a rising gold price and strong production have been fueling investor expectations for a significant rise in earnings this year.

Motley Fool contributor Regan Pearson has no position in any stocks mentioned. 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.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »