Gold has reached all-time highs.
It hasn’t been this high since September 2011.
Spot gold prices have skyrocketed to more than 32% so far this year, putting gold on track for the best year since 1979.
So you’re probably asking yourself, “Where does that leave me?” — and that’s an excellent question. You’ve already noticed that gold has gained some significant momentum, and now you want to know if that momentum will continue. But more importantly, how can you benefit from gold and follow it on its path toward even higher highs?
As an investment, gold has been seen as a “safe-haven” asset in times of uncertainty, whether that's due to economic and political upset, war, devaluations, insecurity, or, as we've seen in 2020, a pandemic. Truth be told, there’s a lot of uncertainty that’s still lingering around the market and has greatly impacted gold; while the rest of the world is uncertain, gold is surging.
As we look ahead, it doesn’t seem like any of these uncertainties will be going away anytime soon — making gold the ideal investment right now. Gold is well-known and accepted throughout the world and isn’t backed by any government or central bank. Gold holds value and will always hold value. That’s what makes gold special and something to consider when everything else seems a little too volatile.
It’s always important to remember that a diversified portfolio is the most beneficial when it comes to investing. In terms of investing in gold, you generally want to dedicate no more than 5%–10% of your portfolio to the precious metal. That’s your safest bet, but it does depend on your personal financial situation and the level of risk you’re comfortable with.
Gold has surpassed $2,000 an ounce this year, which was a record-breaking price. The coronavirus pandemic has instilled many uncertainties into investors and they are looking for investment opportunities that will hold value. The Philadelphia Gold and Silver Index (NASDAQ: XAU) has surged around 30% this year already.
Will Gold Continue to Surge?
Former UBS and now independent technical analyst Richard Adcock has said, "We continue to see this improving volatility backdrop, so there’s no sign that the long-term trend is changing."
This was in response to a possible fall for gold. He’s saying that if gold were to fall, it wouldn’t have any effect on the long-term trend of gold surging. Adcock added, “The market can carry on higher than people expect,” meaning we could easily see gold go higher than it’s ever been.
A survey by MagnifyMoney found that investors — especially younger ones — have been choosing metals and cryptocurrencies to invest in as market uncertainties continue to linger. Indeed, 27% of the people who responded to MagnifyMoney’s survey indicated that they have considered moving some of their retirement funds into gold or cryptocurrency within the last three months as the coronavirus shakes the stock market.
Citi economists are already citing that they believe the metal could reach $2,100 an ounce this quarter and possibly even hit $2,300 an ounce in the next six–12 months.
Right now, two drivers are increasing the demand for gold:
- The demise of fiat currencies like the U.S. dollar.
- The dreary economic outlook.
Headlines about gold’s new highs and how investors are preparing for an uncertain economic future are more available to us than they ever have been. It’s also a lot easier to get your hands on gold, or at least in your portfolio.
Compared with the rest of the world, the U.S. is having a hard time getting on the path to recovery as it comes to the coronavirus, and that has weakened the U.S. dollar. The U.S. dollar could drop further if the country stays on the same path it’s been on for the past few months with no clear direction of how to safely recover from a highly contagious virus.
So now that we know all of this about gold and how it could continue to surge higher with a continued dismal economic outlook and a continued decrease in the U.S. dollar, you’re probably thinking about how you can take advantage of this gold upswing while it lasts.
Where to Go From Here?
When you’re considering getting your hands on gold, you might be debating companies involved with mining gold. This would be an excellent step in the right direction. As the demand for gold goes up, those who supply gold will see an increase in revenue.
Three gold mining companies that might be worth your consideration as you look into gold investments are Barrick Gold Corporation, Yamana Gold Inc., and SSR Mining.
Barrick Gold Corporation (NYSE: GOLD)
Barrick Gold is based in Canada and works with the production and sale of gold and copper. It has operating mines and development projects in the U.S., Canada, South America, Australia, and Africa. Barrick is one of the world’s largest mining companies. Most of its revenue comes from the gold that it mines. However, the company has been making plans to expand and grow its business. It recently acquired Randgold Resources and that provided Barrick Gold with a healthy revenue boost. It has also finalized a joint venture with Newmont that might be the world’s largest gold-producing complex in Nevada. Barrick will have 61.5% control in this new venture with Newmont — making way for more revenue and extremely productive operations in the U.S.
Yamana Gold Inc. (NYSE: AUY)
Yamana Gold is based in Canada, and it owns and operates gold, silver, and copper mines in Canada, Chile, Brazil, and Argentina. This company has been looking to grow. It has been able to move into Phase 2 after it found a probable 7.4 million ounces of gold in Agua Rica, Argentina. This came shortly after findings in the Jacobina mine in Brazil. The company has recorded its highest average daily mill throughput in May 2020. This was such a monumental achievement that the company has plans to revise its 2020 forecast. Another impressive milestone that the company is about to come up to is that it’s on target to eliminate all debts it has due by the end of 2020. Because of its successes this year, Yamana has been able to raise its dividend — this would be the fourth time it's raised its dividend in the past year.
SSR Mining Inc. (NASDAQ: SSRM)
SSR Mining is based in Canada, and it’s not only focused on the exploration and development of gold, but it also has dedicated its time to silver. Its operations are located throughout the Americas in Nevada, Saskatchewan, Canada, and Argentina. This past May, the company agreed to an acquisition deal with Alacer Gold Corporation; this would be an all-stock, zero-premium deal valued at C$2.4 billion (US$1.7 billion). Shareholders in both companies voted on the approval of an at-market merger in July. This should help with SSRM's cash flow to help create a more compelling balance sheet. The merger will also give SSR the ability to have a larger footprint. It will now have operations in one of the largest gold mines in Turkey — Çöpler gold mine.
Gold is surging, and you want to make the best decision for you and what you’re comfortable with. What you want to keep in mind is that you don’t want to overtrade. Investors who buy and hold for a long time tend to be the most successful.