The Magazine for Asian Investors
The hot topic at the moment is probably called Omicron or is it simply being cooked hotter than it actually is to distract from the real problems. What is certain is that Omicron is spreading and has reached the majority of countries. News from South Africa gives however for the time being reasons to be less concerned about the whole Omicron story. According to data, the rate of hospitalized cases is very low, about 1.5%. This underlines the picture that the Omicron variant probably causes less severe cases than politicians want to admit.
In addition, there continues to be confusion over split news from mainstream media channels. While some news outlets say that the currently available vaccine offers little protection, other news outlets say that the third vaccination makes the virus harmless.
The news that should have particularly interested investors this week were the meetings of the 3 major central banks.
The U.S. Federal Reserve announced this week to slow down its QE program faster than previously planned. The tapering will now be $30 billion per month. In addition, if economic factors allow, there will be up to three interest rate hikes next year. That already sounds far more aggressive than in previous Fed meetings. It seems like rapidly rising inflation is starting to be a concern, especially when you look at the PPI numbers at almost 8%, which shows what’s waiting down the road.
The ECB has probably not yet really recognized the signs and continues to make rather weak noises. Although they now want to end the PEPP program next year, no one really wants to touch on interest rates. Meanwhile, inflation in Europe continues to rise to historic levels. PPI in Germany has risen by 19.2%.
The Bank of England has now become one of the first to raise interest rates by 0.25%.
The gold price was able to make a jump upwards after the statements of the central banks and could even briefly jump back above the $1,800 mark. On Friday, the gold price could close just below $1,799.70 per ounce. The signs are still bullish for the gold price because it seems that especially in the stock markets soon the liquidity is reduced. In addition, the real interest rates are still in the minus and continue to fall. This is at the expense of the purchasing power of ordinary citizens who have to suffer. All the more important now seems to be financially educated and to make the right investments.
Shares of gold producers currently provide an opportunity to bet on rising gold prices in the future. But why shares of gold producers? During the year there was a real sell-off of the shares, which makes them relatively cheap at the moment. In addition, no one seems to be really interested at the moment, a situation made for investors. As the old saying goes: buy when there is blood in the streets. Now there seems to be an opportunity. So let’s take a look at the movement of stocks this week.
Gold Mining Stock Performance
Gold Fields Limited (NYSE: GFI): Gold Fields Limited is a South African company based in Johannesburg. The company has nine mines in operation. They are located in Australia, Peru, South Africa, West Africa (including the Asanko joint venture), and Chile’s project.1
Agnico Eagle Mines Ltd. (NYSE: AEM): Agnico Eagle is a gold producer that has been in business for over 60 years. The Canadian-based company operates mines in Canada, Mexico, and Finland.2
Newmont Corporation (NYSE: NEM): Newmont is the largest gold producer, producing over 5 million ounces of gold per year. The company has mines spread across North America, South America, Africa, and Australia.3
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