Something is going wrong in the economic system. You don't need to study to get this impression, a glance at the daily press or social media is enough. The past decade is celebrated by politicians as an economic success because, among other things, there was no recession in Germany or the USA. However, the reason for this economic stability is based on a monetary policy of the central banks that is tantamount to redistribution. The winners of this strategy will be the precious metals industry.
Takeovers on the rise
2019 was a great year for the gold industry. The precious metal gold rose by 18%, the best performance since 2010. This development was fuelled by the change of opinion of the US Federal Reserve FED. Originally it was announced that interest rates would be raised by 50 basis points, but instead there was a
cut in interest rates of 75 basis points.
As a reaction to this, gold stocks and the precious metal itself experienced high demand. In this context, it is hardly surprising that
M&A activities increased. In 2018 the transaction value in the gold sector was USD 10.7 billion and in 2019 the volume reached USD 23.7 billion.
Debt at record levels
Global debt in an environment of negative interest rates now amounts to
about USD 11 trillion. The global economy has never been supported by such a high level of debt and the loose monetary policy of central banks around the world suggests that 2020 will also be a good year for gold.
Over the past decade, the FED has been at its original target of 2% interest rates for just 11 months - the rest of the time below that to avoid stalling the economic engine. It shows how fragile the whole system has become. This development is at the expense of savers and pension systems. An
increasing old age poverty is pre-programmed.
Gold companies for protection
If you want to hedge your portfolio and are looking for an investment, you should take a look at the companies
B2Gold (TSX: BTO), Newmont (TSX: NGT) and Osino Resources (TSXV: OSI). B2Gold has a market value of CAD 5.5 billion at a price of CAD 5.34. Newmont is considered a heavyweight in the mining industry and at a price of CAD 51.17, the company has a market value of CAD 46.9 billion.
Osino Resources is valued at CAD 55 million at a price of CAD 0.82 per share and is
likely to become interesting in light of increased M&A activity. It is likely to be a matter of drilling and data until Osino Resources is acquired.
CONFLICT OF INTEREST & RISK NOTE
We would like to point out that Apaton Finance GmbH, the owner of news.financial, as well as partners, authors or employees of Apaton Finance GmbH may hold shares in the aforementioned companies and that there may therefore be a conflict of interest. Further details can be found in our ´
Conflict of Interest & Risk Disclosure´.