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CPI Figures Rise to Historic Level – Is This the Bull Case for Gold Producer Stocks?

Inflation continues to be the hot topic after inflation data were reported Friday from major economies such as the U.S. and Germany.

The Bureau of Labor Statistics has confirmed what many had suspected, that U.S. inflation continues to rise, with CPI rising to 6.8% YoY in November, the fastest pace in 40 years. While the Biden administration is trying to downplay the issue, much of the population will be hit hard by the increase in energy products and food. Energy products have risen 33% YoY in November with fuel up about 58%.

Inflation in Germany rose in November to its highest level in 30 years. The Federal Statistical Office reports an increase of 5.2%, which should make Germans even more critical of the ECB. It seems likely that some have opened the history book to revisit the events of the Weimar Republic. One would probably try to draw the parallels, which would probably bring one to the point of the incredible currency printing. Energy products are the hot iron also in Germany with an increase in November of 22.1% including heating oil that showed an increase of 101.9%.

The gold price was able to rise again a bit after the inflation figures and is currently traded at $1,784.20 per ounce. After the week further pressure on the gold price had arisen as U.S. labor market figures distributed positive sentiment among market participants. The real case for rising gold prices is hidden in real interest rates, as gold traditionally has its bright hours when people worry about their purchasing power. This should now give everyone food for thought with the rapidly rising inflation. Gold is insurance that is better to have and does not need it than when you need it but do not have it.

Even if this is the case for physical gold there is an alternative to participate in the gold market with leverage. Since the bull case for gold is in any case still present, the shares of gold producers should also benefit from this. The shares of gold producers continue to move at attractive levels and for interested investors definitely worth a look. How did the shares of gold producers perform this week?

Gold Mining Stock Performance

Period: 06.12.2021 – 10.12.2021

Top Performer:

Northern Star Resources Limited (ASX: NST): Northern Star Resources Limited is a global gold company based in Australia. The company operates in Australia and North America.1

Newcrest Mining Limited (NCM.ASX): Newcrest is an Australian gold producer based in Melbourne. The company is one of the largest gold producers in the world and has mines in Australia, Canada, and Papua New Guinea. It is also the largest gold producer listed on the Australian Stock Exchange.2

K92 Mining Inc. (TSX: KNT): K92 Mining Inc. is a gold producer headquartered in Vancouver Canada. The company operates a gold mine in Papua New Guinea.3

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