- Gold hit all-time high as investors flock to protect wealth on the fear of inflation, economic turmoil, currency fluctuations
- To leverage strong momentum of gold, investors may benefit from junior mining stocks
- GoldHaven appears to be well positioned to capitalize on rising attractiveness of gold market
Historically, gold played the role of a safe haven asset during economic decline or increased volatility due to heightened uncertainty. The pandemic has been no different as the precious metal hit its all-time high in early August, surpassing $2,075 per ounce. With the expectation that the price of the precious metal will stay strong in 2021, GoldHaven Resources (CSE: GOH) (OTCQB: GHVNF) looks to be well positioned in the space. As a junior mining company focused on identifying and capitalizing on precious metal projects in mineral-rich districts within stable political jurisdictions, GOH may well be able to leverage the robust momentum of the gold market.
In the latest gold price surge, another driving force emerged — government spending at unprecedented levels. To fight the damaging effects of a looming recession, central banks inject cash into the financial system, a mechanism called monetary easing, while governments embark on a spending spree. Since the onset of the pandemic, the government has injected trillions of dollars, leading to public debt hitting an all-time high in the post-World War II years (https://ibn.fm/6pok8).
These factors traditionally lead to inflation, which in turn pushes up the price of gold. Also, monetary easing lowers investor confidence in the currency’s strength, which then increases the demand for gold as a safe haven. The U.S. Dollar Index tracks the value of the US dollar against a basket of major currencies such as the euro, Japanese yen, pound sterling, Canadian dollar, Swedish krona and Swiss franc. After a spike around the onset of the pandemic, the U.S. Dollar Index shows that the currency has been declining steadily for most of 2020 (https://ibn.fm/i3RFB), making gold even more attractive as an investment alternative.
Investors have various options in gold investing, including buying physical gold or stocks of gold mining companies. Physical gold includes gold bullion, coins and jewelry, for which investors usually need to pay for storage and insurance. Alternatively, they can invest in gold mining companies. As a junior mining company, GoldHaven is poised to benefit from the favorable market environment for gold. According to a recent article published by “Forbes,” investing in junior gold miners may be more attractive during the volatile bull market than larger gold miners (https://ibn.fm/rJX3J).
A gold mining company is worth the value of its gold reserves. Larger companies tend to mine a lot of gold, effectively depleting their reserves every year. To replenish those resources, larger mines can either do explorative work to find new deposits or buy another company with a gold ore stock, which is less risky. As gold price surges, junior miners become more likely to get taken over by larger miners, potentially making their stock prices rally. Also, new gold deposits could make a large difference to a junior miner’s value, while for bigger companies, the impact is usually much smaller. These factors all contribute to the attractiveness of junior miners in times of a strong gold market.
As a Canadian junior exploration company led by a seasoned executive team, GoldHaven is poised to thrive in today’s gold-market environment. With mining assets located in stable political jurisdictions such as the Maricunga Gold Belt of Northern Chile, GoldHaven Resources believes it leverages the right people, the right product, and the right time to capitalize on this favorable environment.
For more information, visit the company’s website at www.GoldHavenResources.com.
NOTE TO INVESTORS: The latest news and updates relating to GHVNF are available in the company’s newsroom at http://ibn.fm/GHVNF
