Why did Aussie gold stocks fall today?

What Happened to Aussie Gold Stocks?

Aussie gold stocks had a rough day today. Four out of the five top decliners in the ASX 200 were gold stocks. Northern Star Resources [ASX:NST] had the biggest decline, falling around 5.5%. Newcrest Mining [ASX:NCM], Australia’s largest gold producer, fell around 3.4%.

Why Did This Happen to Aussie Gold Stocks?

Aussie gold stocks are influenced by the gold price denominated in Aussie dollars. In US trade overnight, the US dollar gold price fell and the Aussie dollar rose against the greenback. This created a double whammy for the Aussie dollar gold price, and it fell around 1.5%.

Today, that translated into relatively sharp falls for the Aussie listed gold miners. In addition, some gold companies released their reports for the March quarter. For example, NST reported higher than expected costs and slightly lower than expected production, hence its 5% plus share price decline.

What Now for Gold Stocks?

It’s worth putting these falls into context though. The Aussie dollar gold price has had a strong run so far this year, thanks largely to a weak Aussie dollar against the greenback. As a result, many Aussie listed gold companies have performed very well.

In general, these stock prices are very volatile so today’s price action isn’t all that unusual. In fact, given the price falls across the sector and the positive outlook for the Aussie dollar gold price, it may be worth picking up a few shares if this selloff continues.

Regards,

Greg Canavan+
for Markets and Money

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Greg Canavan is a Contributing Editor at Markets & Money and Head of Research at Port Phillip Publishing. He advocates a counter-intuitive investment philosophy based on the old adage that ‘ignorance is bliss’. Greg says that investing in the ‘Information Age’ means you now have all the information you need. But is it really useful? Much of it is noise, and serves to confuse rather than inform investors. And, through the process of confirmation bias, you tend to sift the information that you agree with. As a result, you reinforce your biases. This gives you the impression that you know what is going on. But really, you don’t know. No one does. The world is far too complex to understand. When you accept this, your newfound ignorance becomes a formidable investment weapon. That’s because you’re not a slave to your emotions and biases. Greg puts this philosophy into action as the Editor of Crisis & Opportunity. He sees opportunities in crises. To find the opportunities, he uses a process called the ‘Fusion Method’, which combines charting analysis with more conventional valuation analysis. Charting is important because it contains no opinions or emotions. Combine that with traditional stock analysis, and you have a robust stock selection strategy. With Greg’s help, you can implement a long-term wealth-building strategy into your financial planning, be better prepared for the financial challenges ahead, and stop making the same mistakes that most private investors do every time they buy a stock. To find out more about Greg’s investing style and his financial worldview, take out a free subscription to Markets & Money here. And to discover more about Greg’s ‘ignorance is bliss’ investment strategy and the Fusion Method of investing, take out a 30-day trial to his value investing service Crisis & Opportunity here. Official websites and financial e-letters Greg writes for:

 


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