3 Reasons that You Should Add Gold in Your Investment Portfolio Now And Why You Should Pay Attention to Newrange Gold (TSXV:NRG)

gold investment
Published on: February 22, 2022
Author: NAI500

As the tech and crypto markets face turbulence, investors are looking at gold investment again.  The Russian-Ukraine conflict is also making gold look more attractive to investors. These are 3 reasons why investors should keep an eye on gold investments including gold companies moving forward.

1. Gold Price Tops $1900 On Safe-Haven Demand

Gold prices have taken off as safe-haven demand soars. Russia has officially recognized two pro-Moscow separatist regions in Eastern Ukraine, and the US is saying a full invasion of the former Soviet state is “imminent,” if it hasn’t already begun. 

Gold prices are up sharply, trading at an eight-month high of $1,904 midday Tuesday. The UK has already announced sanctions aimed at Russia’s five largest banks, and US President Biden is scheduled to release a statement regarding the promised “mother of all sanctions” measures previously packaged. 

April gold futures are up nearly 6% to an eight-month high, and bulls appear to be gaining momentum. 

2. China’s Covid-Zero Policy Is Giving a Polish to Gold

Inflation aside and geo-political crises aside, one factor at play makes climbing gold prices a little unusual. 

10-year Treasury yields have topped 2% for the first time since 2019, and markets are widely expecting no less than six rate hikes, starting as early as March. Usually, climbing interest rates send investors flocking to assets that offer higher returns than precious metals – but that is not the case right now. 

Gold has been trading sideways, for the most part, this year, with prices spiking above $1,900 last week. Historically, gold and yields share an inverse relationship, but that seems to have been temporarily abandoned. 

One theory as to why this is happening points to the pent-up demand to buy things from Asian consumers.

Buyers in India have more than doubled their jewelry purchases compared to last year, scooping up 611 metric tons of the yellow metal. In China, jewelry demand has surged 63% to 675 tons. 

With a zero-Covid policy still in effect, many traditional money-splurging outlets remain unavailable to Chinese consumers. 

3. WGC: “Gold Has Historically Outperformed in The Months Following the Onset of A US Fed Tightening Cycle”

Despite the hawkish tone emanating from the Fed and several widely anticipated rate hikes, there is reason to believe that gold will continue to shine. 

First, the Fed has been teasing rate hikes for months, and despite the threat, gold prices have remained resilient. Secondly, tightening up monetary policy could wreak havoc on US stocks and the highly indebted economy, both of which could support higher gold prices. 

Finally, as a recent World Gold Council (WGC) report points out, “gold has historically outperformed in the months following the onset of a US Fed tightening cycle.”

Taking a look at historical gold returns during the four most recent tightening cycles, gold appears to underperform US stocks during the one-year and six-month periods before a rate hike but turn it around to outperform both stocks and the dollar in the six months and one year following the increase.  

The WGC notes that a weaker dollar and poor stock returns may be the reason for gold’s comparatively superior performance as investors favors the precious metal as a safe-haven asset. 

In a recent Forbes piece outlining the historical performance of gold during recent rate hikes, CEO and CIO of US Global Investors Frank Holmes wrote:

“The time to buy may be now, potentially less than two months before the Fed says it will take action. As always, I recommend a 10% weighting in gold, with 5% in physical bullion and 5% in high-quality gold mining stocks, mutual funds and ETFs.” Adding, “I also think an allocation of around 2% in Bitcoin, or “digital gold,” also makes sense, especially now with its price still significantly discounted from its all-time high.”

The Best Ways to Invest in Gold Without Holding It

Taking down, buying, and holding physical gold is not a practical way to do gold investment for most investors. 

Derivative-based financial instruments, like futures and call options, can offer some sophisticated investors synthetic gold exposure; however, this type of leveraged investing requires a high degree of understanding of the products being purchased. 

A simpler way for investors to gain exposure to precious metals like gold is through mutual funds or ETFs that track gold or by investing in gold mining stocks. 

One Gold Mining Stock to Watch: Newrange Gold $NRG

Newrange Gold Corp. (TSXV: NRG) is a Vancouver-based mineral exploration company first incorporated in 2006 as Colombian Mines Corporation. In July 2016, the company diversified into the United States by acquiring the high-grade Pamlico gold project in Nevada, which has since become the epicentre of its exploration efforts with multiple high-grade mineralization targets spread over a vast 5,700 hectare property. 

The company officially changed its name to Newrange Gold Corp. in December 2016 but retained its seasoned, highly successful management team and quality projects. Newrange Gold is committed to building long-term, sustainable value for shareholders.

Investment Highlights:

  • Unique opportunity to explore & develop the past-producing, high-grade Pamlico gold district in Nevada
  • Large, untested target in the prolific Red Lake area of NW Ontario
  • 100% interest in the past-producing Argosy Gold Mine Property 
  • Well-financed for exploration
  • Led by a team of successful mine finders and company builders

Recent updates:

On February 17, 2022, NRG announced that inaugural drilling had begun on a previously untested iron formation at the North Birch property. A total of 2,000 meters of drilling is planned across five targets. With gold discovered elsewhere on the property and proximity to the Argosy Mine, North Birch “checks all the boxes for potential discovery,” according to Newrange President and CEO Robert Archer. 

In January, a detailed mapping sampling program initiated at the historical Central Mine area of the Pamlico Project yielded widespread mineralization with some values reaching 47.34 g/t. Archer described the findings as “very encouraging,” saying “the new information will be important for our follow up drilling.” 

Disclaimer: The company described in this article is a customer of NAI Interactive Ltd. This material is for informational purposes only and is not intended as a recommendation or offer or solicitation for the purchase or sale of any securities or financial instruments, or for transactions involving any financial instrument or trading strategy.

Gold In-Depth Analysis Mining Precious Metals