Welcome to The Weekly by Synergy! 5-minute musings on the markets, current trends, and events. From our opinions, observations, analysis, and news commentary, just a few lines to get you started every week. Read on…
This week’s commentary will be centered on the changes that 2020 brought for gold. From a rocky beginning at the start of the year to an impressive comeback, gold has really made history this year.
When we look at the way gold performed in 2020, it’s really outstanding. Although most commodity markets fell in the first half of the year due to the COVID-19 pandemic, gold really pulled through in the second half of the year (from June to September). Once markets had recovered, and the demand for gold rose through Asian countries, gold prices sky-rocketed and reached an all-time high of over USD $2,000 per ounce.
Gold markets fluctuate, sometimes wildly, but with its flight to safety role in front of uncertainty, it remains as a safe-haven. Investing in early-stage gold companies is our preferred way to play this market, given the additional exposure to exploration upside.
One company that has showcased the benefit of this strategy is Chalice Mining (ASX: CHN, OTCQB: CGMLF). Starting 2020 on the ground floor, Chalice Mining was selling for only $0.16 AUD on the ASX; but after a world-class discovery at Julimar, near Perth, Western Australia, Chalice Mining’s share price rose by more than 2700%, reaching an impressive 52-week high -near the end of 2020- of $4.96, bringing the company to a $1.5b market cap.
We believe that the stage is set for gold to have a strong 2021, with the potential of reaching $2,500 and even $3,000 but not much higher than that. This is because we also see increased competition from new asset classes that share some similarities and can replace (at least for some investors) the role of gold, such as cryptocurrencies, as they become mainstream.
Do you think gold is worth investing in? We’d love to hear your thoughts. Reach out on our social media channels and find additional resources here.
And that is it for today. See you next week!