Best Gold Stock for Price Growth and Inflation Fears

Published on: October 19, 2021
Author: NAI500

Gold Project Gains Amid Weaker USD

Gold stock is looking good again after taking a dip during Friday trading as the US struggles with a declining dollar.

Despite pulling back from the $1,800 resistance mark, gold has managed to hold on to previous gains while prices look poised to break two straight sessions of losses, trading up as much as 1.2% as of Tuesday morning before settling in at $1,770.60 at 1:58 EST.

Amid worsening economic conditions, the Greenback continues to slide, touching a new 3-week low. The DXY US dollar index was down 0.84% from last week’s high, trading at $93.70, while XAU/USD was able to capitalize on this movement to gain 0.29%.

Newly released data from the Commerce Department shows a 1.6% decline in US housing starts. At the same time, August data was revised down to 1.58 million units from the previously reported 1.615 million. In keeping with this trend, it was also revealed that future building permits for September fell 7.7% to 1.589 million from August’s revised total.

The housing sector is a key driver of US economic growth. Supply crunches and labour shortages have put pressure on the housing market, with builders unable to meet demand.

Meanwhile, a worldwide energy shortage is putting pressure on global stock and bond markets as investors worry that rising energy costs will fuel inflation and put the brakes on economic recovery.

Inflation fears, a weak US dollar, worse than expected housing starts, and a global energy crunch are all pushing investors to safe-haven assets like gold, even in the face of climbing US Treasury yields.

Gold Prices Gain as Inflation Concerns Grow

Inflation worries have reignited as recent CPI and PPI numbers show inflationary pressure in the US is climbing, causing many to speculate that the Feds will begin tapering asset purchases sooner rather than later.

Combined with the inflation flame-fanning effects of the global energy crunch, many investors are looking to safer assets as a means to protect their wealth from a depreciating dollar.

According to David Meger, director of metals trading at High Ridge Futures, “We see undertones of support coming from the general idea that inflationary pressures are going to be enough to hold gold up in the midst of an environment where we see the Federal Reserve slowly moving towards reducing asset purchases.”

This may not be good news for global stock markets, but it does present an opportunity for gold bulls as risk-averse investors move into gold and gold stocks.

The increasing threat of 1970s style stagflation is also beginning to rear its ugly head, as high energy costs, climbing inflation, coupled with high unemployment could create a challenging economic environment.

Should stagflation talk inch closer to becoming a reality, Commerzbank analyst Daniel Briesemann predicts gold prices could hit $1,900 by year-end.

Instead of Buying Gold with No Leverage, Gold Stocks like Newrange Gold Might Be A Better Choice

Gold is the world’s favourite non-producing asset and has long been considered the safe-haven investment of choice for risk-averse investors. But, as a non-producing asset, gold investors are limiting their potential for gains to price speculation alone.

A better choice might lie with mineral exploration companies like Newrange Gold Corp. (TSXV: NRG; OTCQB: NRGOF), where leveraged positions can produce stock returns far in excess of increases in gold prices alone.

Newrange Gold recently released an update on the status of its flagship Pamlico Project in Nevada, where recent diamond drilling, mapping, and sampling programs have outlined a significant and wide-ranging polymetallic mineralizing system.

These latest results have highlighted the potential for the Pamlico Project to become a significant new discovery in the prolific gold-producing Nevada region.

“The recognition of metal zonation at Pamlico is a significant step forward in the exploration of the project,” said Newrange CEO Robert Archer in the statement.

While he noted that structural complexity has made it difficult to trace out the area, “Ongoing mapping, rock and soil sampling, in conjunction with the expanded IP survey, are demonstrating strong intrusive activity in the southern part of the newly enlarged property, with widespread copper, zinc, silver and gold mineralization that was previously unrecognized.”

The promising results demonstrate that “It now appears that we are dealing with more than one phase of mineralizing activity spread over more than 25 square kilometers and the Pamlico Mine area may be just one portion of this.”

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.

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