Intelligent Investor

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Considering gold is seen as a hedge against inflation and insurance against a bear market for industrial stocks, is it possible for gold mining shares to rally when the stock market is rising?
By · 23 Apr 1999
By ·
23 Apr 1999
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Yes, there were strong rallies in gold shares in 1985-1987 and again in 1993, all positive years for the Dow and our market as well. Historically, however, gold has its best years in the early stages of a bear market. This is because lower stock prices almost always lead to a lower US dollar, which usually leads to a higher price for gold and its shares. In the aforementioned years, the stock market rose but the US dollar fell, which is why gold performed well. For example, the U.S. dollar decline in 1985-1987 was caused by an international agreement to depress the value of the greenback.
IMPORTANT: Intelligent Investor is published by InvestSMART Financial Services Pty Limited AFSL 226435 (Licensee). Information is general financial product advice. You should consider your own personal objectives, financial situation and needs before making any investment decision and review the Product Disclosure Statement. InvestSMART Funds Management Limited (RE) is the responsible entity of various managed investment schemes and is a related party of the Licensee. The RE may own, buy or sell the shares suggested in this article simultaneous with, or following the release of this article. Any such transaction could affect the price of the share. All indications of performance returns are historical and cannot be relied upon as an indicator for future performance.
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