The value of gold in Australia has approached all-time highs in 2020 and is expected to remain strong in the 2020-21 financial year in the world's second-largest gold-producing nation.
At this point most investors are turning to the dependable metal to protect their finances in uncertain times. Meanwhile, other investors are looking to gain exposure and benefit from the rising precious metal's spot price through Australian gold mines. Operators such as AuStar Gold and others are reaping the rewards with production of physical gold and are thriving at a time when many industries are facing severe hardship.
As the coronavirus pandemic continues to destabilise the economy and drive Australia into its potentially first recession in decades – with the possibility of a second wave extending the uncertainty further – gold is one of the few resources that offers security to investors and is helping the nation to compete against other developed economies.
15% Rise In Six Months
The price of gold in Australia increased by more than 28% per cent in the six months from January to July 2020, according to data from GoldPrice.org. This represents an increase of over $440 per ounce to reach a price of around USD $1959.80 per ounce.
The rising investment in gold since the beginning of the year reflects the timeline of coronavirus speculation.
2020-21 Gold Forecast
As the current year has clearly demonstrated, it's impossible to predict what the future holds, but many market analysts concur that gold prices will continue to be strong over the new financial year, particularly in light of low interest rates, the risk of inflation and other fiscal stimuli.
The latest quarterly outlook report released by the Australian Government's Industry Department revealed that gold exports reached $27 billion by the end of FY19.
The department forecasts that exports will rise to $32 billion in FY20, revised significantly from its earlier prediction of a drop to $21 billion. However, the price forecast for FY20 remains cautious at USD $1587, well below current levels.
Safe-haven Asset
As the Australian and global economies have struggled to deal with the COVID-19 pandemic, gold has recorded solid gains to prove itself one of the most reliable and lucrative investment options.
As interest rates fall, and the bank becomes a less lucrative, gold is a sought-after alternative for many investors during the crisis. Even though returns on gold are never certain, the eternal demand for the precious metal makes it a comparatively low-risk investment and a means to safeguard finances in the event of inflation.
Whatever the financial year has in store, optimism for gold demand is high as one of the best ways for Australians to hedge their investments while other markets falter.
Barclay Pearce Capital's client AuStar Gold Limited (ASX:AUL) is an exciting gold exploration, mining and production company with a portfolio of historical, near term development and current assets based around the Morning Star Gold mine located approximately 120 km east of Melbourne in the Walhalla to Woods Point gold field.
The company is focused on the mining and production of its flagship Morning Star gold mine that has historically produced over 830k oz of gold. Additionally, AuStar has 670 km2 of exploration tenements covering the Walhalla to Woods Point dyke swam with historic high-grade production totalling in excess of 6 million ounces of gold.
AuStar Gold recently announced that in-mine exploration drilling recommenced at Morning Star in early July. Read about the exploration drilling here and other company highlights in AUL’s latest ASX quarterly report.
AuStar’s vision is to become the next mid-tier gold producer in Australia.
Philip Amery, Chairman is available for an interview. Contact Donna Warner, Barclay Pearce’s Chief Marketing Officer: donna@barclaypearce.com.au
To keep up to date with their news and progress, and for more information about gold investment as a whole, subscribe to the AuStar Gold Chairman’s List.
