Gold ETFs are set to record their highest settlement on record, per an article published on MarketWatch. Two key gold funds are on their way to record their strongest weekly performance since March. The growing uncertainty about the coronavirus situation added sheen to gold investing. The ultra-easy monetary policy is another plus.
The Fed has been acting super-dovish since March. The Fed has cut rates to zero and launched an infinite QE policy. The Fed is also buying highly-rated corporate debt as well as fallen angles. Such measures kept the dollar’s strength in check.
Safe-haven demand for gold has stayed strong despite bear market rallies as several Wall Street analysts still believe the latest rally doesn’t have legs. Plus, not only the Fed, most developed and emerging economies have been on a policy easing mode, offering a hefty stimulus to fight the novel coronavirus.
The ECB and the BoJ have benchmark interest rates in the negative territory. Right now, real U.S. treasury yields are negative from a five-year to 20-year term, which lowers the opportunity cost of holding a non-interest-bearing asset like bullion.
U.S. policymakers have been negotiating on the next round of stimulus package as the CARES Act is about to expire. One of the key issues of the debate is the $600-per-week increase in unemployment benefits. Treasury Secretary Steven Mnuchin said in a CNBC interview on Jul 23 that the increased unemployment benefit would be “approximately 70% wage replacement” in the Republican proposal, as quoted on Yahoo Finance. As lawmakers try to ensure that their plan is “administrable in the 50 states,” the progress in the next bill is slowing.
Stocks & ETFs in Focus
Against this backdrop, we highlight a few gold mining stocks and gold ETFs that appear as healthy bets now (read: Here’s Why Silver Outshining Gold ETFs).
Stocks in Focus
Northern Dynasty Minerals Ltd. (NAK) – Up 64.8% Past Week
Northern Dynasty owns the right to purchase 100% of the Pebble gold-copper-molybdenum porphyry deposit, where successful drilling programs have delineated an Inferred Mineral Resource. The stock has a Zacks Rank #2 (Buy).
Golden Star Resources Ltd GSS – Up 21.7% Past Week
GOLDEN STAR RES is an un-hedged gold producer that owns the Wassa gold project in Ghana and controls a number of gold exploration properties in West Africa. The stock has a Zacks Rank #3 (Hold).
New Gold Inc. (NGD) – Up 19.1% Past Week
New Gold Inc. is focused on the exploration and development of the Afton Copper-Gold Project, located 6 miles (10 km) west of Kamloops, British Columbia. The stock has a Zacks Rank #2.
ETFs in Focus
Aberdeen Standard Physical Gold Shares ETF (SGOL) – Up 4%
This ETF is designed to track the price of Gold Bullion. The Aberdeen Standard Physical Gold Shares ETF seeks to reflect the performance of the price of gold bullion, less the expenses of the Trust.
iShares Gold Trust IAU) – Up 4%
The iShares Gold Trust seeks to generally reflect the performance of the price of gold.
SPDR Gold Shares (GLD) – Up 3.9%
The SPDR Gold Shares reflects the performance of the price of gold bullion, less expenses.
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