Why the gold miners have stormed higher today

The S&P/ASX All Ords Gold (Index: ^AXGD) (ASX: XGD) has had a great start to week and in early afternoon trade is up 1.3%.

Today’s gain means the gold index has risen a remarkable 9% in the last 30 days and comes courtesy of strong gains from the following shares:

The Evolution Mining Ltd (ASX: EVN) share price, the Northern Star Resources Ltd (ASX: NST) share price, and the Medusa Mining Limited (ASX: MML) share price have all climbed at least 3% today.

Elsewhere, there have been notable gains from OceanaGold Corporation (ASX: OGC), Resolute Mining Limited (ASX: RSG), St Barbara Ltd (ASX: SBM), and Perseus Mining Limited (ASX: PRU).

What happened?

With the banks and BHP Billiton Limited (ASX: BHP) being sold-off, investors appear to be in a risk-off mood today. This has led to gains for the gold miners and defensive shares like Transurban Group (ASX: TCL).

The gold miners also received an additional boost from a rise in the gold price. The spot gold price rose sharply on Friday after the U.S. dollar tumbled following a weak jobs report.

At the time of writing the spot gold price is US$1,279 an ounce, up around 1.5% from its low on Friday.

Should you invest in the gold miners?

Whilst I agree with the view that a little exposure to gold can be a good thing for a portfolio, I still feel as though now is not the time to initiate a position.

Next week the U.S. Federal Reserve is widely expected to raise rates once again. As rates rise I expect the gold price will gradually slide lower, dragging down the gold miners as well.

For this reason I think investors should hold off investing the gold miners and look at opportunities elsewhere in the market.

These three opportunities, for example, could be too good to turn down today in my opinion. I expect them to provide far stronger returns than the gold miners over the next few years.

Top 3 ASX Blue Chips To Buy In 2017

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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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