The gold price is printing US$1,464/oz (A$2,158) as at 14pm AEST to fire up ASX gold bugs with popular gold miners like Resolute Mining Limited (ASX: RSG) +5%, Evolution Mining Limited (ASX: EVN) +4.3% and Saracen Minerals Holding Limited (ASX: SAR) +2%, all flying on a day when the S&P/ ASX200 (ASX: XJO) is down 1.5%.
Check out the golden ASX scoreboard below.
Source: ASX, August 5 2019
An additional factor supporting local gold miners is the still falling Australian dollar that is buying just US67.8 cents this afternoon at post-GFC lows.
Local gold miners that also include Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) incur operating costs in Australian dollars, before selling their gold product in US dollars. As such the weaker Aussie dollar is another powerful tailwind for profits.
More generally a lot of business pundits and professional fund managers are tipping gold prices to move higher as central banks around the world move to cut risk free rates on cash. In theory this should benefit gold as it does not pay income and therefore looks less unattractive as a store of value versus other important asset classes such as cash for example.
Others suggest buying gold as a hedge against risk as it tends to rise as a flight to safety when equity markets crash.
The gold price moves in mysterious ways though and more money has been lost trying to predict crashes, than in the actual crashes themselves. As such gold is no guaranteed elixir.
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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.