The biggest winner for this year would definitely be the gold companies and related ETFs. The collapse oil price in January and early February posts a strong downside force to the whole market. And it's the same time for gold companies and other gold ETFs to become the priority asset for investors’ hedging purpose. For the first quarter, net inflows into gold ETFs reaching 363.7 tonnes, a seven-year high. Meanwhile, demand for bars and coins shot up 55 percent year-over-year, from 11.8 tonnes to 18.3 tonnes. Huge demand for gold would come from different levels of need for protection, but the truth is the global economic growth concerns are now on the table of everybody.
Weaker manufacturing in China and a cut in the Eurozone’s growth forecast fueled concern about the global outlook. The latest data, combined with the Australian central bank's decision to cut interest rates, "challenged expectations of growth recovery," said Citigroup (NYSE:C) in a report. The massive selloff of the stock market in Asian and other emerging market for those two days again push the Fed’s talk this Wednesday so important to the US market. So far we saw a good retail report and expectation-meet labor report, also a strong support for inflation target from CPI and housing market. The data here provides a very possible way for Fed to increase the rate while global growth is still the problem.
So how the talk will be like would have tremendous impact on the gold companies. For this year, most of the gold companies’ stock prices went up more than 50%.
Those gainers are most likely depend the price of gold which makes the fed’s talk so important to them. If this time Fed posts a signal of safe economy in US and accelerating the speed of increasing rate, tragedies for both gold and gold companies would then come real for the first time of this year.