The Price of Gold & Gold Stocks Extend Further On Wednesday
The price of gold has been fickle recently. While the market tries to figure out if it’s worried about coronavirus or worried about where to store oil, economists are plotting new trend lines. Many of these foreshadow tougher economic times to come. This week, the recent “ebb and flow” of the market indicated that gold prices may soften.
This came after recent optimism of economic reopening across the country grew. But the fact of the matter is this: some suggest that there could be a resurgence of COVID-19 later this year. That has economists addressing the markets a bit more defensively. Safe-haven stock buying is back on Wednesday. Gold prices are back above $1,700 again and for some analysts, this rally is apparently just getting started.
BofA Global Research Sees Much Higher Gold Prices To Come
A weaker U.S. dollar has started to emerge and concerns of inflation or even stagflation have begun to generate buzz. Meanwhile, the U.S. government said that it is closer to approving another multi-hundred-billion dollar stimulus package for small businesses. As far as June delivery is concerned, the price rose by around 2.6% an ounce after dropping nearly 1.5% on Tuesday.
BofA Global Research recently boosted its 18-month price target for gold to $3,000 an ounce from $2,000. This is more than 50% above a nine-year old record at around $1,921. The main reason behind the aggressively bullish stance on gold had to do with the prospects of endless monetary expansion from central banks. This includes the Federal Reserves initiatives to limit the economic damage from the COVID-19 pandemic.
The Fed Can’t Print Gold
-Bank of America
BofA expects bullion to average $1,695 an ounce this year and $2,063 in 2021. “But beyond traditional gold supply and demand fundamentals, financial repression is back on an extraordinary scale,” the BofA report said.
Barrick Gold Stock Reaches New 7-Year Highs
Bullion isn’t the only thing enjoying a stronger move on Wednesday. Gold stocks have also taken a liking to BofA’s bullishness on gold prices. Shares of Barrick Gold stock (GOLD Stock Report) (ABX) reached new 7-year highs on April 22, aided by this latest report. Seven years ago today, shares of Barrick were trading at a high of $18.81 (April 22, 2013).
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This is during the period where Barrick gold stock was “coming back to earth” during its 2-year slide following the gold rush of 2011. Its all-time high still sits at $55.95. While this is still over 100% higher than its 2020 high, it doesn’t mean other gold stocks aren’t setting new records right now (or at least coming close).
Franco-Nevada Corp (FNV Stock Report) reached highs of $130.42 on Wednesday. This was a new high for 2020. Not only that, but FNV stock just reached a new milestone in the stock market. That $130.42 represents a new, all-time high for the gold stock. Meanwhile, Newmont Gold stock (NEM Stock Report) inched ever-so higher toward its previously set, 2020 high of $61.53. The last time this gold stock traded at these levels it was late-February 2012, just 3 months after reaching all-time highs of $71.54 in November.