What's going on?
Gold just had its best month in three years, its price rising 9% in June to highs not seen since 2013 (tweet this). And some investors are increasingly keen on other commodities too…
What does this mean?
Gold is a “safe haven” investment in times of uncertainty. Although it doesn’t have much practical use in large quantities (unless you’re Scrooge McDuck), its historical links to major currencies mean it’s seen as a good store of value. And it can also be a handy hedge when the value of the dollar falls – partly because investors outside the US get more glitter for their local-denomination gravy.
Iron ore’s perhaps more useful than gold. And its price has risen to five-year highs thanks to truncated supply following a Brazilian mining disaster earlier this year. Cobalt and copper could soon follow: Thursday’s deadly accident at a Congolese mine may disrupt the supply of both metals.
Why should I care?
For markets: Gold? Mine.
The world’s second-largest gold miner, Barrick Gold, is making a fresh push to take over smaller rival Acacia Mining. Barrick kept 64% of Acacia after spinning it off as a separate company in 2010 – but the two can’t agree on a price for the rest. A $300 million Tanzanian tax bill (down from an initial $190 billion) has prevented Acacia from shipping gold out of the country. As the world’s resources dwindle and extraction costs grow, gold miners are digging deep for ways to save money. Merging may help – but not if costs rise instead of fall.
Zooming out: A different kind of mining.
Computers mining “digital gold” bitcoin fired up again last week as the cryptocurrency’s price hit highs not seen since 2017. There have been numerous attempts since then to let investors benefit from cryptocurrencies’ price movements without holding them directly. Many have been based in Switzerland – but a disagreement with the European Union means that, as of Monday, non-Swiss residents are now unable to trade any investments listed there.