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January Was Gold’s Strongest Month in a Year!

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Gold versus the S&P GSCI

The global instability that spread from China, given its currency devaluation, sparked haven assets. Investors need an avenue where they can park their money safely. During these turbulent times, gold often becomes popular, as equities and other investments seem risky. When risk aversion is at its peak, so is gold.

Stocks fell around the world. Commodities, best known as an alternative investment, also fell. The S&P GSCI (Goldman Sachs Commodity Index) includes a basket of 24 commodities. The index fell about 3.5%.

Gold ranked as the second-best investment on the S&GSCI index. Silver came in third. Gold and silver rose 5.2% and 3.3%, respectively, in January. January was gold’s best month in about a year. Platinum and palladium, however, fell 2.4% and 11.3% in January.

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Miners were buoyed

The Global X Silver Miners ETF (SIL) and the leveraged Direxion Daily Gold Miners ETF (NUGT) rose 4.5% and 6.4%, respectively, on Friday. Gold and silver rose only minutely.

The hike in gold prices caused NewMont Mining (NEM), New Gold Inc. (NGD), and Agnico-Eagle Mines (AEM) to rise 12.3%, 5.7%, and 12.3%, respectively, over the past month. These three stocks together make up 12.5% of the VanEck Vectors Gold Miners ETF (GDX).

Despite the equity market’s sharp plunge in January, the mining sector remained pretty favorable.

Let’s look at the mining industry’s performance versus the overall stock market in the next part of this series.

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