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After Another Wild Week, These Mining Stocks Closed Green On Friday
Gold and other precious metals have a tendency to move conversely to the U.S. dollar. Where that stems from is the fact that investors generally flock to gold as a safe-haven against a faltering economy. Similarly, we see a move toward precious metals during times of market uncertainty as well.
Case in point, the U.S. economy is strong right now if experts are to be believed. Yet gold prices are flying this month. In fact, gold futures broke a new 2020 high on Friday. So what’s the source of the “uncertainty”?
If you haven’t taken a look at the news, coronavirus is in almost every headline imaginable. We’ve got cruise ships being held off the coast of California, more deaths in the U.S. and we’ve now broken above 100k confirmed cases across the world. It’s not a matter of the illness killing people – the flu kills far more per year. It’s a matter of what it has done to the global economy.
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What started in Wuhan, China has now quickly spread across the globe. It’s the speed of the outbreak that was an initial concern. But what’s more, is that the true economic impact is yet to be realized. What we do know, however, is that companies like Apple and Cisco are already signaling potential for troubled waters ahead.
Mining & Gold Stocks That Finished The Week Green
The morning surge in gold prices boosted the majority of gold stocks at the start of Friday’s session. But that soon subsided as positive jobs numbers came in. Yet something still persisted which was the drop in broader markets. As coronavirus uncertainty came back in the spotlight Friday, even most gold stocks felt the pressure. Big names like Kinross Gold (KGC-Free Report) and Hecla Mining (HL-Free Report) dropped after reaching weekly highs. Yet others ended the week on a high note.
To truly understand the road ahead, we need to take into account the general economic picture aside from the coronavirus impact. First, the Federal Reserve just did an emergency rate cut. It was the first time the rate was cut at a time of no scheduled meeting since the financial crisis. We’ve also got treasury yields plummeting. Keep in mind, as discussed earlier this week (see: What’s Next For Gold Stocks In March?), low yields can equate to higher demand for gold. So with low-interest rates and low treasury yields, there’s essentially no place to put money into a safety net that would yield a meaningful return – besides gold, historically.
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But this is on a global scale, mind you. Reports show that $14+ trillion, with a T, is carrying negative yields right now. This obviously supports a bullish stance on precious metals. So while today’s action wasn’t as bullish across the board as we’ve seen, the majority of mining and gold stocks finished slightly in the red or close to even, except these, which closed GREEN on March 6: