Gold Stocks GOLD, KGC, FNV Drop as Gold Prices Plunge
Apparently, gold stocks lost a little bit of glimmer today as the share prices of Barrick Gold (NYSE: GOLD ), Kinross Gold (NYSE: KGC ) and Franco-Nevada (NYSE: FNV ) fell early in the trading session. A number of contributing factors are on investors’ minds, including the potential impact of rising inflation on gold stocks. Now, you might assume that high inflation would be positive for gold and the companies that produce it. Thus, the red-hot 9.1% Consumer Price Index (CPI) print for June should be good for Barrick, Kinross and Franco-Nevada, right? Not necessarily. First of all, a high inflation rate doesn’t mean that the dollar isn’t strong. Actually, it is relatively strong when compared to some other world currencies. So, safety-minded investors might choose to hold U.S. dollars instead of gold during these tumultuous times. Also, elevated inflation means that the Federal Reserve is under enormous pressure to take action. This means aggressively raising interest rates. If bond yields are high, those bonds might be more attractive than gold as a crisis hedge.
Gold Stocks GOLD, KGC, FNV Drop as Gold Prices Plunge
Apparently, gold stocks lost a little bit of glimmer today as the share prices of Barrick Gold (NYSE: GOLD ), Kinross Gold (NYSE: KGC ) and Franco-Nevada (NYSE: FNV ) fell early in the trading session. A number of contributing factors are on investors’ minds, including the potential impact of rising inflation on gold stocks. Now, you might assume that high inflation would be positive for gold and the companies that produce it. Thus, the red-hot 9.1% Consumer Price Index (CPI) print for June should be good for Barrick, Kinross and Franco-Nevada, right? Not necessarily. First of all, a high inflation rate doesn’t mean that the dollar isn’t strong. Actually, it is relatively strong when compared to some other world currencies. So, safety-minded investors might choose to hold U.S. dollars instead of gold during these tumultuous times. Also, elevated inflation means that the Federal Reserve is under enormous pressure to take action. This means aggressively raising interest rates. If bond yields are high, those bonds might be more attractive than gold as a crisis hedge.