Mining on the Venture Exchange is projected to have a meteoric rise in 2020. There has been a recent surge of expert advice and opinions in favor of investing in mining stocks. More and more investors are transitioning from other ventures into this industry as a result. The mining industry in 2020 could be highly lucrative, and here’s why.
Safe Haven Investments
Experts have suggested that the US dollar will fall an additional 3-5% in 2020. Financial advisors have suggested that this fall of the dollar will result in both positive and negative outcomes for the economy. However, one thing is for certain – the future is unpredictable.
Various factors lead to an uncertainty of the US economy, such as a volatile lead up to the 2020 election, conflict in the middle east, and of course, the fall of the dollar. Unpredictability leads to increased risk, and as a result, many investors are seeking safe haven investments.
Gold and mining stocks are one of these safe haven investments that have seen such a rise. [MOU1] Early investors who invested in gold and mining stocks in 2019 would have already seen an 18% rise in their investments for that year. This trend is projected to continue, with experts estimating that the price of gold could rise from $1,548/ounce (September 2019 pricing) to upwards of $2,000/ounce.
Chinese and Foreign Economies
One of the reasons that led to such a significant surge of gold and mining stocks is a boost from the Chinese economy. In 2019, China was recovering from a slow down in its economy, but as the economy began to repair itself, demand for gold and precious metals increased drastically.
This demand was further increased by the contributions from other foreign countries. In 2019, the central banks of China, Turkey and Russia bought a combined total of 120 tons of gold in the third quarter alone. This demand is expected to continue, and rise, in 2020.
Stability Amidst Conflict
Gold and mining stocks have been referred to as the “golden” standard of safe haven investments, and once again this has proven to be true. During the week of the Drone Strike on Iran, gold rose to an all time high in the past seven years, reaching $1,600/ounce.
After Iran attacked bases housing US troops in Iraq, stock markets across the globe saw noticeable declines. Although the price of gold peeled back a bit too, safe haven investments tended to fair better.
Why small-caps?
With all these factors and expert projections, now is the right time to get into gold. Savvy investors that are looking for the most return on their investments should consider small-cap stocks. Small-cap gold and mining stocks provide an avenue for growth and opportunity that just cannot be matched by larger companies.
The reason for this is simple, the mining industry is commodity based and heavily dependent on the discovery of gold and other precious metals. This means that in the exploration phase, in order for a venture to be lucrative, materials must be found. Thus, if a company is larger, it does not necessarily mean that it will perform better. Larger companies are subject to unsuccessful operations just as smaller companies are subject to highly successful operations. The same factors apply on all companies industry regardless of company size.
However, small-cap companies hold an advantage over larger companies because the same rules don’t apply in terms of financial growth. If a more established company has a successful operation, their value will grow, but only marginally relative to a small-cap company.
Mining on the Venture Exchange is expected to see significant growth in 2020. Investors considering safe-haven investments should consider small-cap gold and mining companies as a very lucrative venture this year.