The Gold Renaissance: Why Prices are Increasing and What to Watch For

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The Gold Renaissance is upon us. The price of gold has nearly doubled from its 2015 low, and many analysts are predicting an even more significant jump soon.

With the stock market’s current volatility worldwide, investors have been migrating their money into a safer bet.

This being: gold.

Investors have seen gold as a safe asset for many years, making it an excellent choice when investing or diversifying your portfolio during these uncertain times.

Why Gold Prices are Increasing

1. Rising Inflation

The pandemic has left the economy struggling to recover and has resulted in rising inflation. Analysts predict that if the inflationary pressure continues, precious metals like gold could go up in price.

This is because high inflation minimizes the central banks’ ability to increase their rates at the faster speed they usually prefer, making gold a safe backup plan for investors.

Furthermore, with the increasing inflation and the dilution of the dollar’s value, gold prices subsequently increase and become even more attractive for investors looking to diversify their portfolios.

2. The Rise of China and Russia

The continued growth of gold prices is also associated with China and Russia’s continued purchasing and production of gold bullion.

China has 1,948 tonnes of gold and is ranked first in the world for its overall gold production, accounting for approximately 11% of the total global production.

Meanwhile, the Russian Federation currently has approximately 2,292 tonnes of gold and is second in the world for gold production, followed by Australia and New Zealand.

Economic analysts suspect that these superpowers are investing increasingly in gold in order to reduce their dependence on the U.S dollar.

Furthermore, analysts believe that China’s focus on gold is an attempt to establish its currency as a global reserve currency. While Russia is increasingly relying on gold to combat the financial sanctions that the U.S has imposed on it.

3. The Energy Crisis

Nations across the world are facing an energy crisis, with European and Chinese prices skyrocketing to multi-year highs.

The energy crisis has emerged due to various factors, including labor shortages, the pandemic, and supply chain disruptions.

As countries are fast approaching winter, the market is expected to strain under the current deficit and cause low dips in stock prices.

With the increasing prices against a dwindling level of supplies, the market is highly volatile and is forcing investors to think twice before investing in natural resources and coal.

Instead, investors are looking elsewhere to park their money more safely. The increasing attraction of gold thanks to events like the energy crisis has been another reason why the price is jumping.

Gold Mining Companies to Watch

Gold mining companies have been relishing the newfound appreciation for gold on the stock market.

If you’re looking to invest your money in the precious metal resource, here’s a detailed list of mining companies across the ASX, AIM/LON, TSX/V, NYSE, and more.

Here are some tips on gold mining companies on the ASX that are offering promising growth.

1. Evolution Mining

Evolution Mining (ASX: EVN) recently jumped 4% in their share price following the announcement that the Australian state of New South Wales approved their proposed underground Cowal mine.

The New South Wales state government granted land rights for the gold mine until 2040. This will allow Evolution Mining the opportunity to expand its resource exploration to high-grade underground ore.

The mining company sits at a market cap of AU$6.74B on the ASX.

2. Kirkland Lake Gold LTD

Kirkland Lake Gold (ASX: KLA) is set to be the world’s biggest gold mining company following a C$24B nil-premium merger with Agnico Eagle.

As a result, Kirkland Lake Gold has doubled its mineral reserve base to 48Moz.

In a press release, Kirkland Lake Gold stated that: Agnico Eagle and Kirkland Lake Gold have collectively returned $1.6 billion to shareholders through dividends and share repurchases since the beginning of 2020 and expect to further increase returns to shareholders in the future.”

The mining company giant sits at a market cap of AU$12.26B on the ASX and is on track for significant growth in gold prospects.

3. Westgold Resources

Westgold (ASX: WGX) recently announced that it plans to make an off-market takeover of Gascoyne Resources (ASX: GCY).

The move will see Westgold consolidate an exploration portfolio of ≈3900km2 and become Australia’s 5th largest domestic gold producer.

As a result, the mining company expects to increase its gold production to 500,000oz per annum, which is welcome news for gold investors.

Westgold’s Executive Director, Wayne Bramwell said: “With the Westgold announced intention to bid before them, the Gascoyne shareholders now have a superior financial and technical proposal that delivers a premium for their stock and finally the win they deserve.”

Currently Kirkland Lake Gold holds an AU731.62M market cap, which is expected to increase following Gascoyne’s potential acceptance of their proposed takeover.

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