Gold exchange traded funds (ETFs) haven’t been shining quite the way they did last year; year-to-date, they’re up a scant 2% or so. But those who extract and produce the gold aren’t letting that get them down.
Gold may not have a banner year this year, but a recovery that lurches in fits and starts may be enough to sustain safe-haven demand. Jason Scott for BusinessWeek reports that Newmont Mining Corp. (NYSE: NEM), the largest U.S. gold producer, said it’s “quietly confident” that prices of bullion will increase this year. Two reasons for their confidence: central banks haven’t been unloading gold and investors are still looking for shelter from global turmoil. A third factor could be the U.S. dollar, which has gained strength over the last four months, but still remains weak. Gold is usually priced in dollars; a weak dollar makes it cheaper for international investors to purchase. [Junior Miners ETF Getting a Boost.]
GoldAlert reports that both gold prices and shares have gone through a consolidation over the past 15 weeks and may continue to do so, although they seem to be feeling as favorable toward the metal as Newmont does. Gold miners have regained some footing and the macro-economic climate supports a lift of gold prices overall. [Challenges Facing the Mining Industry.]
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For full disclosure, Tom Lydon is a board member on the U.S. Global Investors.