Picking winning investments so far this year has been a difficult task with macroeconomic issues muddying the waters. As the 'cheap' money is wound down by central banks, growth is settling back into a more sustainable trend. However, the Northern Star Resources Ltd (ASX: NST) share price hasn't been negatively affected by this.
On the contrary, the second-largest ASX-listed mining company has been enjoying a run-up in recent weeks. To be precise, the company's shares are now up 17% from where they were a month ago. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is down a disappointing 0.1%.
What's behind the added lustre?
As many investors would know, gold is considered to be somewhat of a safe haven during times of uncertainty. When markets become more fearful and go risk-off, the precious metal often siphons up a portion of the fleeing funds.
Inflation has been a common thematic behind an investment case for gold. Supply chains are still struggling, while elevated demand is failing to be met with new supply across various markets.
Numerous ASX-listed companies have warned of inevitable price reasons as they begin to feel the bite of inflationary costs. Fortunately for the Northern Star share price, this is the type of scenario where it can thrive.
The onset of a conflict between Russia and Ukraine has amplified these issues. Investors are now factoring in increased commodity prices and are seeking more defensive assets.
The byproduct is a gold price that is 7.1% stronger from a month ago. At the time of writing, the physical asset is worth US$1,936 an ounce. As shown in the chart below, this coincides with the S&P/ASX 200 VIX — or volatility Index — spiking in late January and February.
Expectedly, ASX-listed Northern Star Resources has rallied in unison with higher gold prices.
Tracking the Northern Star Resources share price
The uptick in the gold mining company's share price is a welcome reversal for shareholders. Previously, the Northern Star share price had been trending downwards since May 2021, falling 28% in the process.
However, the recent boost means investors in the mining company are now up 3.9% over the past year. Though, when adding on dividends, the total return expands to around 6% — which isn't too shabby.
