The coronavirus pandemic has proven to be a hammer blow to the global economy and also for the financial markets. In addition to that, the latest jobs report from the United States has revealed that as many as 6.6 million Americans had applied for unemployment claims last week.
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That is an alarming number, and in such a situation, it is bound to force investors to look to invest in safe-haven assets like gold. That has, in turn, helped in the recent surge in gold, silver, and precious metal stocks. Some of the stocks that recorded significant gains last week include Coeur Mining, Hecla Mining, Pan American Silver, and First Majestic Silver.
Gold has enjoyed a remarkable rally in recent weeks, and as of Thursday last week, it was trading at $1,680 an ounce. That is close to the record highs it had hit back in 2013. Silver, on the other hand, climbed more steadily and was trading at $15 an ounce, up from $12 an ounce in March. While it is true that the higher price of gold is expected to be a major boost for gold producers, it should also be noted that the coronavirus pandemic has forced many companies to suspend operations temporarily.
Hence, it might not be right to assume that higher gold prices are going to lead to higher gains for gold mining companies. While the shutdowns at many mines are a factor, it should also be kept in mind that the current crisis has affected economies all over the world. It is still unknown whether the lockdowns are going to be extended in many countries.
Hence, it could lead to an indefinite period of disruption to the gold mining process. In this sort of situation, investors need to analyze the different gold producing companies on merit and weight those companies against the existing situation in the global economy, before making a decision.