Monday , 20 May 2024

Gold Mining Stocks Could Produce Handsome Results In 2024 – Here’s Why

…Gold and gold stocks sometimes offer wonderful trading opportunities,,,[and this is one such time. Here’s what I mean:]

This post has been edited and abridged from the original article by Eric Fry for the sake of clarity and brevity to provide you with a fast and easy read.

In no particular order, the gold price will likely benefit from…

  1. Falling Interest Rates: The gold price almost always rises when interest rates trend lower. Most recently, the gold price rocketed higher from 2001 to 2011, when the Fed was systematically suppressing rates. Then again, the gold price soared during the pandemic when the Fed was holding rates close to zero.
  2. Weakening Dollar: Because interest rates are falling, the dollar exchange rate might also drift lower. A weak dollar usually manifests itself as a strong gold price.
  3. Rising Geopolitical Tensions: Almost nothing benefits from geopolitical tension or wars other than weapons manufacturers… and gold. Hopefully, the current tensions around the world moderate throughout the year. But the mere possibility of growing instability could support a strong gold price.
  4. Central Bank Buying: On a net basis, the world’s central banks have become large, consistent gold buyers. In 2022, they bought more than 1,000 metric tonnes – equal to more than one-quarter of the world’s annual gold production. Central bank buying, by itself, will not trigger a major gold rally. But that buying could help power a rising price trend.

A Time for Everything

Remember, gold is not an investment in the traditional sense. It is not an operating business and will never generate earnings growth or pay a dividend. Gold is, as Warren Buffett famously stated, “forever unproductive” but, as the writer of Ecclesiastes observed, “There is a time for everything” [and, given the 4 reasons outlined above]…select gold mining stocks could produce handsome results this year.