Low interest rates - high gold price
Opportunity costs are what stock market experts call, among other things, lost returns when an alternative investment could have been made. For gold, this is a weighty argument for hoarding, buying and selling. In the case of gold, bond yields of issuers with good credit ratings are often taken as opportunity costs. In particular, U.S. government bonds are used to measure the opportunity cost of gold.
Here gold bulls can look calmly into the new year. Because the forecasts of major investment houses that buy U.S. government bonds remain subdued for 2021. According to a breakdown by news service provider Bloomberg, eight banks (TD, BMO, Deutsche Bank, JP Morgan, NatWest, Morgan Stanley, Société Génerale, Bank of America) gave an expected range of 0.9 percent to 1.5 percent for ten-year U.S. government bond yields. While this is higher on average than the current yield of just under one percent, it is well below the 1.94 percent seen at the beginning of 2020.
As two-year and five-year yields are still well below this indicated range, the foregone returns on holding gold, i.e. the opportunity costs, should remain low in 2021 if the banks' analysts are right. The gold price should thus remain well supported. This should also keep the shares of companies with good gold projects in demand. Examples are GoldMining, Fiore Gold and Revival Gold.
GoldMining - https://www.youtube.com/watch?v=42YOOPxclKU - recently celebrated a huge success. The stock was added to the VanEck Vectors Junior Gold Miners ETF on December 18. This should mean additional demand for GoldMining's stocks in the coming weeks. In any case, GoldMining is in a good position with its projects mainly in Brazil and the USA and several million ounces of gold resources.
Fiore Gold - https://www.youtube.com/watch?v=lcxM3ly04xE - owns the Pan Mine in Nevada (11 percent higher gold production in 2020 compared to 2019) and nearby the Gold Rock project, where the pre-feasibility study shows positive economics.
Revival Gold - https://www.youtube.com/watch?v=CCP6YOVKuQo - has a prospective property in Idaho, the Beartrack-Arnett Creek Gold Project. It is forecast to produce 72,000 ounces of gold annually over an initial seven years.
Latest corporate information and press releases from GoldMining (https://www.resource-capital.ch/en/companies/goldmining-inc/) and Fiore Gold (https://www.resource-capital.ch/en/companies/fiore-gold-ltd/).
In accordance with §34 WpHG I would like to point out that partners, authors and employees may hold shares in the respective companies addressed and thus a possible conflict of interest exists. No guarantee for the translation into English. Only the German version of this news is valid.
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