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Why Northern Star and these ASX gold miners crashed lower

James Mickleboro
Share prices down

It certainly was a disappointing day of trade for Australia’s leading gold producers.

The gold industry was a sea of red on Wednesday after trade war concerns eased and investors switched out of safe haven assets and back into risk on assets.

This put significant pressure on the gold price and the shares of Northern Star Resources Ltd (ASX: NST) and the rest of the gold miners.

So much so, the gold miners were collectively the worst performers on the index. This led to the S&P/ASX All Ords Gold index falling a sizeable 4.25%.

Here’s how a selection of the gold miners performed on Wednesday:

The Evolution Mining Ltd (ASX: EVN) share price tumbled 4.5% lower to $5.16.

The Newcrest Mining Limited (ASX: NCM) share price fell over 2% to $36.67.

The Northern Star Resources (ASX: NST) share price sank almost 7.5% to $12.11.

The Regis Resources Limited (ASX: RRL) share price dropped 6% to $5.63.

The Resolute Mining Limited (ASX: RSG) share price fell almost 5% to $1.80.

The Saracen Mineral Holdings Limited (ASX: SAR) share price was the worst performer with a 9% decline to $4.08.

The St Barbara Ltd (ASX: SBM) share price fell 7% to $3.67.

Where next for the gold miners?

Given that the trade war between the U.S. and China has more twists than a rollercoaster, it is near impossible to predict what will happen next for the gold price and ultimately the gold miners.

But I’m a firm believer that a little exposure to gold can be a good thing for a portfolio for diversification reasons. This could potentially make it an opportune time to pick up shares on this weakness.

But which ones should you buy?

Whilst I think that Newcrest and Northern Star Resources are high quality miners and worth considering, my pick at this stage would be St Barbara for valuation reasons. I think its shares offer the best risk/reward are current levels.

But if you're not keen on gold then these ASX blue chip shares could be great options for investors looking to get ahead.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019