Image Source: PixabayWe live in interesting times. The price of gold has moved up more than the S&P 500 this year. Gold has been rallying despite the rebound in the US dollar. Bond yields have been rebounding, and yet gold has remained strong, too. So, what is going on? And how can Alamos Gold Inc. (AGI) potentially help you profit? Here are my thoughts, explains Eoin Treacy, editor of Fuller Treacy Money.My favored way of thinking about gold is as an asset that benefits from negative real rates. It has historically done best when real rates trend lower. That is not currently the case, and gold is still powering ahead.So, what is going on? Central bank buying is part of the answer. They bought around 600 tonnes a year between 2012 and 2019. The total dropped in 2020 for obvious reasons, but began to recover in 2021. Then purchases surpassed 1,000 tonnes in 2022 and again in 2023.When the World Gold Council announced their half-year figures, the total buying was already 500 tonnes this year. So, it is reasonable to expect that central banks have continued buying.Perhaps a better question is: Why are central banks buying gold? That answer is much more nuanced. There is a clear desire to reduce reliance on the US dollar system. That’s not so much about displacing the dollar as the medium of international exchange.Instead, there is a clear trend underway to ensure reserves are held in assets that are beyond the ability of the US government to influence. Non-US bonds and gold fit the bill as potential reserve assets.
Alamos Gold Inc. (AGI) Chart
As for Alamos Gold, it briefly hit a new high on Monday and rebounded on Tuesday. The trend has remained quite consistent, with a clear succession of higher reaction lows. I remain of the view that Alamos is a promising takeover candidate for a major looking to boost North American exposure.My recommended action would be to consider buying shares of Alamos Gold.
About the Author
Eoin Treacy is a world-renowned global strategist, fund manager, consultant, author, and presenter. He is editor of the Rogue Portfolio, strategist at FullerTreacymoney, director at Nevada Trust Company, and investment director at Southbank Research.Mr. Treacy’s approach to markets incorporates a novel macro behavioral matrix and heavily features crowd psychology as a timing tool for markets. He has been regularly interviewed and quoted in Bloomberg TV, CNBC, NDTV, CCTV, and The Wall Street Journal.More By This Author:Enerflex: An International Energy Infrastructure Play That’s On The Right TrackMarkets Showing Strong Momentum. Can It Last?T. Rowe Price: For A “Sure Retirement”
