Spot gold prices have hit another five-month high – the second time in 2021 they’ve peaked at such an interval – reaching $US1866 ($2544) per ounce to end Friday, November 12.
While the peak provided some respite from a steady decline since August 2020, it still maintained a downward trend since that time, falling short of the previous notable peak of $1908 in May 2021.
Fat Tail Investment Research gold investments editor Brian Chu told Australian Resources & Investment that investment safe havens like gold were now well placed to receive those escaping volatile markets like cryptocurrencies.
“(Crypto investors) are going to start taking massive hits while the smart money is moving to safe havens and instead of cryptocurrencies, which is often considered an exuberant asset market, I think gold and gold mining companies are going to be beneficiaries of this tightening cycle,” Chu said.
In September, Chu forecast the decline in gold prices to be a simple case of better value, trusting that a spike of this nature was just around the corner.
Instead of worrying about a 12-month decline, Chu said more recently that smart financial management from individuals and businesses alike could easily make the best of a bad situation.
“Some of the best run gold mining companies manage their balance sheet so well that in the soft part of the cycle, when everyone else is struggling to keep their lights on, these are the companies that are making offers to buy up and take over their competitors at a discount,” Chu said.
Despite the price decline in 2021, exploration expenditure has continued to set records.
Geoscience Australia director of mineral resources and promotions Allison Britt said gold had retained its spot atop explorers most-wanted list in 2021.
“Gold continues to be the most explored commodity in Australia with expenditure in 2020-21 amounting to $1.53 billion, an increase of 32 per cent on 2019-20,” Britt said.
“While copper and iron ore remain the next most sought-after commodities.”