The Motley Fool

Here’s why the gold price is going gangbusters

The Australian dollar gold price is around record highs this afternoon to lift popular gold miners such as St Barbara Ltd (ASX: SBM), Resolute Mining Ltd (ASX: RSG), Northern Star Resources Ltd (ASX: NST) and Evolution Mining Ltd (ASX: EVN) 9.7%, 9.3%, 6.9% and 6.1% higher this afternoon. 

One factor lifting the Australian dollar gold price is the local currency’s ongoing slide against the U.S. dollar in which gold is sold on spot or futures markets.

For example as at 15.50pm AEST the U.S. dollar gold price is US$1,386.30 which translates into A$1,985 per oz for local gold miners selling their product.

Moreover, many of these local miners incur nearly all of their costs in Australian dollars before selling their product in U.S. dollars, which means the falling Aussie dollar is a powerful tailwind to their all important profit margins.

As such we can see why many gold mining investors on the local market have enjoyed a profitable few years. 

The gold price moves in mysterious ways with many different inputs affecting it, although it’s generally acknowledged that as interest rates rise gold becomes less attractive as an investment as investors can gain better risk-free returns elsewhere by just sitting on cash or buying government bonds for example. 

However, it’s growing expectations that the US Fed may move to cut rates before the end of 2019 that means the gold price has caught an up draught. 

Commonly gold is also perceived as a hedge against downside risk in capital and equity markets and attracts anyone bearish on the outlook for the global economy. 

As such investors in the precious metal have an almost impossible amount of variables and information to weigh up before making an investment decision. Gold is not my cup of tea though.

One ASX Stock For An Estimated $US22 Billion Marijuana Market

A little-known ASX company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.

And make no mistake – it is coming. To the tune of an estimated $US22 billion.

Cannabis legalisation is sweeping over North America, and full legalisation arrived in Canada in October 2018.

Here's the best part: we think there's one ASX stock that's uniquely positioned to profit immensely from this explosive new industry... taking savvy investors along for what could be one heck of a ride.

AND, this is the first time The Motley Fool Australia has EVER put a BUY recommendation on a marijuana stock.

Simply click below to learn more on how you can profit from the coming cannabis boom.

Click here to find out more

 

Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned.

You can find Tom on Twitter @tommyr345

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 Scott Phillips.

5 ASX Stocks for Building Wealth After 50

I just read that Warren Buffett, the world’s best investor, made over 99% of his massive fortune after his 50th birthday.

It just goes to show you… it’s never too late to start securing your financial future.

And Motley Fool Chief Investment Advisor Scott Phillips just released a brand-new report that reveals five of our favourite ASX stocks for building wealth after 50.

– Each company boasts strong growth prospects over the next 3 to 5 years…

– Most importantly each pays a generous dividend, fully franked.

Simply click here to find out how you can claim your FREE copy of “5 ASX Stocks for Building Wealth After 50.”

See the stocks now