It hasn’t been a very pretty day for the markets as we start the new week. At the time of writing, the S&P/ASX 200 (INDEXASX: XJO) is down 2.22% to 6,980 points – falling below the psychologically important 7,000 point level for the first time since the start of February.
Just to think, it was only last week we were sitting at all-time highs.
But there’s one sector that is (perhaps predictably) an island of green in the sea of red.
ASX gold miners.
What are the ASX gold miners up to today?
Saracen Mineral Holdings Limited (ASX: SAR) is the leading gainer on the ASX at the time of writing, with a 7.4% daily gain to $4.50 a share.
St Barbara Ltd (ASX: SBM) is close behind with a 5.24% gain to $3.01.
We also have Northern Star Resources Ltd (ASX: NST) banking a 4.11% gain to $15.08 a share.
The ASX’s king of gold mining Newcrest Mining Ltd (ASX: NCM) is up 4.13% to $29.90 a share.
Why are ASX gold miners leading the pack today?
Well, as you might have guessed, the price of the yellow metal itself is a driving force here. Gold is currently asking US$1,663 an ounce – its highest level since November 2012. The gold price is now up 25% over the past year, which more or less matches the performance of the broader stock market in terms of price gains.
What’s even more extraordinary is the price of gold in Australian dollars. Gold is universally traded in US dollars, so Aussie gold miners have to operate in greenbacks and then take home the profits in Aussie dollars. And since our dollar is at GFC-matching lows, we are now at a stage where gold has never been priced higher in Australian dollars – with one ounce commanding an Aussie price tag of $2,516.50.
That’s a recipe for huge profits and the market knows it. That’s why the ASX gold miners are performing so strongly today.
Is it time to buy ASX gold shares?
Well, if you believe the old maxim that investing is about ‘buying low and selling high’, you probably wouldn’t think so. In my opinion, you can only really benefit from cyclical stocks like gold miners if you buy them when no one else wants to. That time is not today.
I think gold stocks can be used as something of a hedge against the broader stock market, but this strategy is risky and I don’t do it myself.
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Motley Fool contributor Sebastian Bowen has no position in any of the 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 Scott Phillips.