Is Gold on Schedule to Catch Inflation Train?
Author: Joe Forster
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Gold shows some resilience
Gold traded in a narrow range in December, finishing at $1,829.20 per ounce for a $54.68 (3.08%) gain. The metal posted its $1,753.66 low for the month on December 15 following the Federal Open Market Committee (FOMC) meeting in which the Federal Reserve (“Fed”) set the stage to begin increasing rates as early as next spring in order combat rising inflation. However, the selling pressure quickly dissipated and gold rallied to the $1,800 per ounce level the following day. Gold’s resilience suggests the Fed might have a tough time in its battle with inflation.
Lots of action for the miners recently
The larger gold producers gained with the metal as the NYSE Arca Gold Miners Index1 (GDMNTR) rose 2.18%. Meanwhile, the MVIS Global Junior Gold Miners Index2 (MVGDXJTR) was flat for the month. However, amid seemingly calm gold markets, merger and acquisition (M&A) activity picked up substantially in the fourth quarter.
Three major companies have announced friendly acquisitions of single asset companies —each commanding a premium of 20% to 30%:
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