Far East Capital Newsletter
How to make money in the changing gold sector?
7 Apr 2024

In This Issue

How to make money in the changing gold sector?

There is obviously something more than the outlook for interest rates affecting the gold price. We are back to that stage of the cycle where it is being driven by emotional buying rather than simple interest rate expectations. It is not rationally mathematical and therefore it is not predictable. Much of that buying is coming from the fear emanating from China so it is not merely trading. It could be a fundamental shift in the Chinese savings strategy as the citizens switch into the hardest currency there is - gold. Property is no longer an alternative destination for their savings.

This is a whole new dynamic that has already delivered a period of upwards volatility in the gold price. If there is one factor that drags in more buying, it is the perception that the market is going higher and the traders are missing out. It is good old fashioned FOMO.

As we have observed in recent weeks, the enthusiasm for bullion has barely moved many gold company share prices. However, it is only a matter of time before that changes. The rise above US$2,300/oz might just be the start of the next upward leg. People could come rushing back to the gold equities market, but how do you decide which companies are going to be the best investments ... or trades? Read on. 

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