Gold Prices Surge But Gold Stocks Teeter In Wednesday Trading
The Federal Reserve giveth and the Federal Reserve taketh away. That’s the latest highly scientific deducement in the stock market today. The U.S. stock market finished sharply lower on Wednesday after a grim, near-term outlook was given by Federal Reserve Chairman Jerome Powell. “The scope and speed of this downturn are without modern precedent, significantly worse than any recession since World War II,” Powell said.
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But by the look of the stock market, in general, it would be hard to understand that in any significance. Despite going negative for the year, the NASDAQ just recently went positive for 2020. The S&P has also just come off of its best month in decades and, overall, has bounced back by over 30% since mid-March.
So how could the market seemingly be back in the good graces of the bulls, yet the economy be in such a grim state of affairs? It could have something to do with the trillions being pumped in by the Fed and U.S. government to keep things afloat in these unprecedented times. But the telltale sign of fear could be found by simply looking at the recent trend in gold prices.
From May 4-11, the price of the precious metal has been holding stead. Meanwhile, there was a micro-rally in the stock market. One might think if this rally was as strong as a true bull rally, gold would be the first thing to take a hit. But gold prices remained in their sideways trend that began late last month.
How Do Gold Stocks Fit Into The Equation?
We can certainly say that the price of gold has fueled gold stocks this year. We discussed in a previous article this week, how gold stocks without news have performed admirably. That’s been due, in part, to the rise of gold prices of course. But on Wednesday, broader gold stocks actually stalled a touch.
Barrick gold stock (GOLD Stock Report), IAMGOLD (IAG Stock Report), and even Franco-Nevada gold (FNV Stock Report) all slid a bit on Wednesday. While it wasn’t anything close to the slide from mid-March, it was notable. The reason being is that the price of gold jumped higher by over $20 on May 13. Norway’s sovereign wealth fund said Wednesday that it is blacklisting four of Canada’s largest oil producers from its trillion-dollar portfolio, citing high carbon emissions from their operations. The Norwegian fund had more than $1.1 trillion in assets at the end of 2019 making it one of the world’s largest investors.
“The Council of Ethics recommended to exclude the companies because of carbon emissions from production of oil,” the fund said. It was the first time the fund has used ” unacceptable greenhouse gas emissions” as a reason for blacklisting companies.
Were There Any Gold Stocks To Watch?
Similar to earlier in the week when gold took a slight downturn, there were a few gold stocks to watch. Newmont gold stock (NEM Stock Report) for instance, closed green for the session. Shares haven’t performed the best (nor the worst) since hitting fresh 2020 highs this month. NEM stock has been more or less consolidating on a daily front. Wednesday saw the gold stock’s first green close in 3 sessions.
The company announced that it expects to begin safely ramping up operations at Peñasquito in Mexico on May 18. This is following the government’s designation of mining as an essential activity. Newmont said it will continue to utilize protective measures for workers and neighboring communities.
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“With the government of Mexico incorporating mining into the list of essential businesses that will be allowed to recommence activities on May 18th, we are preparing Peñasquito and our workforce for a safe, orderly and timely resumption of production,” said Tom Palmer, President and Chief Executive Officer.
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