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Why the gold price rise is sending the gold miners higher in 2017

The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) may be drifting lower today but it certainly has been a very different story for the S&P/ASX All Ords Gold Index (Index: ^AXGD) (ASX: XGD).

At the time of writing the gold index is up a remarkable 4.3%, bringing its year-to-date return to a massive 19%.

Amongst the biggest movers on the index today have been the following gold miners:

Company Gain %
Alkane Resources Limited (ASX: ALK) 7.5%
Beadell Resources Ltd (ASX: BDR) 7%
Newcrest Mining Limited (ASX: NCM) 3.5%
Northern Star Resources Ltd (ASX: NST) 5%
Resolute Mining Limited (ASX: RSG) 6%
Saracen Mineral Holdings Limited (ASX: SAR) 5%
St Barbara Ltd (ASX: SBM) 7%
Tanami Gold NL (ASX: TAM)  7%

Why have the gold miners rallied?

Once again the gold price has climbed higher overnight and currently fetches US$1,234 an ounce.

This is now over US$100 an ounce higher than its December low, and is the result of sustained weakness in the U.S. dollar.

According to Bloomberg the U.S. dollar has weakened and the gold price has strengthened as investors grow wary over the possible impact of President Trump’s domestic and international policies.

Trump’s policies were expected to cause inflation to rocket and prompt the Federal Reserve into raising interest rates. But with no reflationary policies being put forward thus far, it’s not hard to see why investors have become dubious.

But ultimately if Trump plans to make America great again I feel he’ll have to follow through on his election promises regarding infrastructure spending and corporate tax cuts.

This is likely to result in higher inflation, more rate rises, and a stronger currency. The key ingredients to sending the price of gold significantly lower.

For this reason I would suggest investors lock in the sizeable gains they have made on the gold miners this year before it’s too late.

The gold miners aren't the only shares I would avoid right now. These popular blue-chip shares feature in portfolios up and down Australia, but could their respective share prices be about to drop lower?

3 Blue-chip Shares I’m Avoiding in 2017

Successful investing is as much about avoiding potential losers as it is picking winners.

With that in mind, here are three shares I am avoiding in 2017, at least based on their current share prices. Although they could go higher from here, the risks do appear to outweigh the potential rewards.

Simply click here to receive your free copy of "3 Blue-chip Shares I’m Avoiding in 2017" right now.

Motley Fool contributor James Mickleboro 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.

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