We all know that the price of gold and gold exchange traded funds (ETFs) have been on an upward trend for awhile now, but not everyone knows why this matters and how it works.
David Mckay, the executive editor of Miningmx, sat down with News24 and explained it. Mckay says gold’s price is affected by several factors, including its lure for investors seeking tangibles when the dollar weakens. Global economic worries and political turmoil send investors to gold, as well. Most recently, the mining slowdown has decreased the supply.
The supply deficit has kept an underlying fear, and banks have been fed by the ground stocks. Mckay adds that banks are not selling their gold into the market, adding to the appreciation.
In South Africa, a higher gold price translates into security: the economy is stronger, mining jobs are safer and it’s good for those who invest in South Africa’s gold mining companies through the Market Vectors Gold Miners (GDX), for example.