Gold, gold, gold. How it has glittered in Australia for so long now.
Yesterday, I glanced at the new highs list on the ASX. It was a small collection of six or seven stocks.
Gold shares made up at least three of them.
And no wonder, the gold price is staying steady in Aussie dollars at $2,600 an ounce.
That’s very good margins for most.
It’s also spurring exploration all over Australia.
Explorers are dusting off plans and proposals from yesteryear to go discovering once again.
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Just the other the day I read about a mine that was active in Western Australia between 1936 and 1942 before it closed down.
Why was that?
It was the price peg the US government put in place in 1933. It fixed the price of gold at US$35 an ounce.
Mines are like any other business. They have costs. Those rose while their product — gold — couldn’t rise.
That removed the upside from mining the stuff. So they left it in the ground in many places.
That government price fixing also seeded the gold boom that eventually broke out in the 1970s.
The world stopped exploring and producing it for decades.
That brings us to today. All over Australia there are old mines and maps that may have lots of gold.
The huge price in today’s Aussie dollars makes it viable to hunt for it again.
It’s exciting and has been going on for some time. One notable success is Bellevue Gold Ltd [ASX:BGL].
Way back in 2018 the general stock market was tanking. But not BGL. It broke out in a big way. It doubled in about a month.
Why? An old mine it was exploring revealed a new rich source of gold at high grades.
Some say BGL may be sitting on the best gold deposit in Australia today.
That’s not to say you should rush out and buy BGL.
The company has now moved into a different stage than the raw excitement and profit potential of a pure explorer.
But there are plenty of gold companies around where you could try and use the same playbook.
Take a suggestion…
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The gold train is running, and picking up steam in a big way.
There are few industries making great money in Australia right now.
Gold is one of them. Perhaps you could make investing easier for yourself and go where the strength is.
Take a look at some of the other sectors in the market…
The general economy is in the toilet. Retailers will be scrabbling for every dollar.
That implies price wars, and discounts, and cutting costs. That doesn’t make for a compelling stock investment.
Retailing REITs are at war with their own customers.
That’s a wrangle that won’t be resolved anytime soon.
And as for the rest of the commodity space? With the exception or iron ore, prices are mostly in the toilet.
Oil and gas have been hammered. Copper and zinc won’t roar with the economy so weak.
The banks won’t fire for a long time.
They have a long slog working through bad debts, troubled customers, and low rates for the foreseeable future.
That puts gold at the likely centre of the action for exploration strikes, mergers, and acquisitions.
It was only this week that Alacer Gold [ASX:AQG] announced it was merging with another Canadian gold company.
It’s not unreasonable to expect more deals like this.
And look at the list of big time billionaire investors publically revealing they’re buying gold…
It’s a roll call of the best in the game for the last 40 years: Sam Zell, Ray Dalio, Stanley Druckenmiller, Paul Tudor Jones, Jeffrey Gundlach, Paul Elliott Singer, Seth Klarman, Mark Mobius.
The interesting thing about the gold boom is that it’s been going on everywhere except the US for the last few years.
Gold is trading at record highs in nearly every currency except the US dollar.
I doubt that’s going to last long with the US Fed pumping out trillions of funny money…with probably plenty more to come!
Gold investments and trades should be at the top of your watchlist.
PS: Our publication Profit Watch is a fantastic place to start your investment journey. We talk about the big trends driving the most innovative stocks on the ASX. Learn all about it here.