Janet Yellen, Chair of the Federal Reserve, announce a 0.25% point raise in its key interest rate.
Source CNN: Fed Raises Key Interest Rate
The price of gold responded sharply with the Fed announcement, spiking over $20 per ounce.
As can be seen in the chart above, the price jumped immediately with the announcement.
After an initial dip in the price of gold early in the trading session Tuesday, gold finished strong to close out the day flat at $1,238.90, (-$0.20).
The puzzling thing is the ICE Dollar index was up 0.5%, showing a strong U.S.
The shares of iron-ore mining stocks have risen dramatically over the past few weeks, as Chinese iron-ore futures have climbed.
Ore producers Cliff Natural Resources and Vale S.A. are up over the past month, mirroring the price movement of their focus commodity.
There was a great article in the Wall Street Journal recently highlighting Aegis Value Fund’s 40.5% gain over the past 12 months. Aegis Value, which is managed by Scott Barbee, has benefited greatly from the rise in gold stocks this year.
Deutsche Bank recently suggested that based on the continued strength of the US dollar vs the Euro and the Pound, the European mining sector is headed for a 20% drop. Copper has fallen 9% from its peak in Q1 2016, the USD has grown by more than 2%, and the European market has overperformed by 30%.
Once the territory of science-fiction movies, recent large-scale adoption of automated heavy equipment is allowing mines to greatly reduce their labor costs. Trucks, loaders, boring and drilling machines and more are now available with remote or semi-autonomous capacity. Other upcoming automation advances, such as fully-automated long-haul trains (which are now being tested), will continue to expand the range of tasks that require few or no workers to be involved.
