Gold stocks rise on rate cuts, economic uncertainty

March 9, 2020

Gold is living up to its reputation as a haven during turbulent times.

The precious metal has climbed to a seven-year high March 9, breaching the $1,700 level briefly, as global equities continued to fall as they assessed the economic fallout from the coronavirus.

Between 2012 and 2015, bullion fell, reaching a low of $1,154 an ounce in November 2015.  It began climbing gradually thereafter. The price increases accelerated last June when the U.S. Federal Reserve relaxed its stance on interest rates. Spot prices touched US $1,475.60 in August, rising to current levels. The spot price was $1,670 an ounce Mon. Mar. 9.

Gold often does well when real, or inflation-adjusted, interest rates are negative. With the US Federal Reserve cutting interest rates by half a percentage point to a 1% to 1.25% range, 10-year U.S. treasuries have a negative yield after inflation which is running at 2%. The Fed’s rate cuts were matched by the Bank of Canada last week

While investors are worried about inflation, there are also broader worries about the economic impact of the coronavirus.

Harvest Portfolios Group launched a global gold ETF in January, 2019.  The actively managed  Harvest Global Gold Giants Index ETF (TSX: HGGG)  tracks 20 equally weighted positions of the Solactive Global Gold Index.

HGGG primarily invests in large gold mining issuers listed on stock exchanges in North America, Australia and Europe. About 54% of the fund is Canadian companies, 20% are based in Australia, 15% in the UK and 10% U.S. The average market capitalization is CAD $13 billion.

For more on Harvest ETFs: click here.

Harvest ETFs, managed by Harvest Portfolios Group Inc.

The views and/or opinions expressed in the article are of a general nature and are for informational purposes only. Article contents should not be considered as advice and/or a recommendation to purchase or sell the mentioned securities or used to engage in personal investment strategies. Investors should consult their investment advisor before making any investment decision. 

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