#6 - AngloGold Ashanti (NYSE:AU)
Gold is the ultimate safe-haven asset. When the Fed lowers rates, it has a destructive effect on the U.S. dollar. By destructive, it means that it normally has an inflationary affect (i.e. the dollar doesn’t buy what it used to).
However, these are strange times. The United States has just introduced $6 trillion of new stimulus (i.e. money created out of thin air) into our economy. But the U.S. economy was arguably the healthiest of all economies heading into the crisis. As a result, foreign investors are buying U.S. treasuries and propping up the dollar. We can’t destroy the currency if we wanted to. And the Fed can’t seem to get the inflation it seems to want so badly.
The common response to lower interest rates is for investors to flock to gold. But owning physical gold can be tricky. And right now, getting your hand on some actual bullion may take some time. That’s where a stock like AngloGold Ashanti (NYSE:AU) comes in. The stock is up over 40% in the last 12 months. And with interest rates likely to remain low for a considerable time, the stock should have a nice runway for growth.
The stock just crossed over both its 50- and 200-day moving averages, which is a bullish sign for the stock.
About AngloGold Ashanti
AngloGold Ashanti plc operates as a gold mining company in Africa, Australia, and the Americas. The company primarily explores for gold, as well as produces silver and sulphuric acid as by-products. Its flagship property is a 100% owned Geita mine located in the Lake Victoria goldfields of the Mwanza region in north-western Tanzania.
More- Current Price
- $31.96
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 4 Buy Ratings, 1 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $31.75 (0.7% Downside)
It may not seem like it, but the fundamentals of the economy still apply. When interest rates are low, certain stocks and sectors tend to outperform. But these are interesting times. Social distancing will change our economy. It may change the growing bias against homeownership. It will definitely be an additional catalyst for e-commerce.
And there are some stocks that have an opportunity to surprise investors with their performance.
When interest rates are lower, bond yields tend to decline as prices rise. And even as investors are trying to keep cash on the sideline, their cash becomes less valuable as interest rates fall.
For that reason, dividend stocks can be a safe haven because of the income they provide investors. A common denominator of all the stocks in this presentation is that they all pay a dividend. But each of the stocks in this presentation also has unique opportunities for growth. And ultimately, the total return of a stock should be an investor’s primary concern.
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