| Exploring how Gold Investments Can Depend on Inflation | |
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Will Asian Markets Decide Gold's Price in 2016? (Continued from Prior Part) Inflation and gold
Inflation and gold have a long-sought relation with each other. Investors perceive gold as a hedge against rising inflation. The relationship may not necessarily hold in the short run, but over a little longer run, say 10–15 years, investors may buy gold to protect themselves from rising commodity prices. One of the major concerns around the hike in the interest rates has been the lower inflation.
Even with such lower inflation concerns, the Federal Reserve raised interest rates for the first time in almost a decade on clues of labor market improvement. Higher interest rates, coupled with sticky downward inflation, erode the investor appeal for gold. Let’s not forget that gold is a non-interest-bearing asset, unlike Treasuries.
The US ten-year break-even spread
We use the yield spread or the break-even spread to depict inflation in the US economy. This measures the difference between the ten-year US government bond yield and TIPS (Treasury Inflation-Protected Securities).
The principal invested in TIPS is adjusted in line with the CPI (consumer price index). The yield spread, therefore, seems to be a good proxy for the US inflation measure.
As the graph above shows, a close link between gold and inflation developed right after the 2008 crisis. As inflation continues staying low, the hope for a significant bounce back in gold prices remains dependent on the inflation move. The direction in gold prices will also determine the direction of ETFs like the iShares Gold Trust (IAU) and the Market Vectors Junior Gold ETF (GDXJ). The mining companies are majorly price takers and look out for gold price fluctuation. Stocks like Agnico Eagle Mines (AEM), New Gold (NGD), and Aurico Gold (AUQ) may depend on gold price fluctuations. These three make up 8% of the Market Vectors Gold Miners ETF (GDX).
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New Gold Inc.
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PRODUCTEUR |
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CODE : NGD |
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ISIN : CA6445351068 |
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CUSIP : 644535106 |
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New Gold est une société de production minière d'or basée au Canada. New Gold est productrice d'or, d'argent, de cuivre, de plomb et de zinc au Mexique et en Australie, en développement de projets d'argent, de cuivre et d'or au Bresil, au Canada et au Chili, et détient divers projets d'exploration au Canada. Ses principaux projets en production sont PEAK MINES en Australie et CERRO SAN PEDRO, MESQUITE et CERRO SAN PEDRO au Mexique, ses principaux projets en développement sont AMAPARI au Bresil, NEW AFTON au Canada et EL MORRO au Chili et ses principaux projets en exploration sont AJAX - PYTHON, BUCK CLAIMS, 3TS, SIZZLER, CC PROPERTY, VO PROPERTY, TAK PROPERTY, MOUSE MOUNTAIN, G-SOUTH, CHUBBY BEAR, LIBERTY BELL, BOULEVARD, BOUVETTE, WIT YUKON, RAM, SLATE FALLS, PROSPECTOR MOUNTAIN, MAYO, DAVIDSON, BLACKWATER, BOULDER CREEK, CAPOOSE, NATIONAL, CORRAL CANYON et RUDE CREEK au Canada et RIO FIGUEROA au Chili. New Gold est cotée au Canada, aux Etats-Unis D'Amerique et en Allemagne. Sa capitalisation boursière aujourd'hui est 610,0 millions US$ (534,3 millions €). La valeur de son action a atteint son plus haut niveau récent le 07 janvier 2011 à 9,99 US$, et son plus bas niveau récent le 20 mars 2020 à 0,39 US$. New Gold possède 575 460 032 actions en circulation. |