It appears that Olympians and Zac Efron are not the only people who’ve been going for Gold. 🥇 Following January’s dramatic tech stock tumble, some investors have been following the rainbow. Two of the world’s largest prospectors, Freeport-McMoRan (FCX) and Barrick Gold (GOLD) have been making gains since then. Freeport-McMoRan has been shimmering up 29% since 28 January and Barrick dazzling, up at 21.5%, with the ‘golden children’ of the US share market delivering a combined market cap of US$107.55 billion. Au-some. ✨
They may not be the only gold diggers. Among others, Equinox Gold (EQX) has surged 24.3%, Yamana Gold (AUY) has risen 23.3%, Royal Gold (RGLD) jumped a shimmering 21.3%, B2Gold Corporation (BTG) soared 17.6%, Franco-Nevada Corporation (FNV) climbed 14.6% and Newmont (NEM) is up 13.4% - all since late January. And for those who like gold stocks with a chance of bling, VanEck Merk Gold Trust (OUNZ) ETF shares can be sold for gold bullion, and they’re shining, up 5.7% this month. But unlike City of Gold Dubai, not all that glitters is gold, and research is always king when shopping around. 👑
But why gold, why now? There may be a few reasons. While real gold maintains its popularity because of its use in jewellery and electronics - because of its connective, malleable and tarnish resistant properties - buying actual shiny gold bars comes with a weight of problems. Specifically, how and where to safely store it. Plus it needs to stay competitive against behemoth gold mining companies that have the ability to increase production and reduce costs. But gold has a ‘mixed track record during inflationary periods’, according to Morningstar data. And real gold is cherished by its owners and can be passed down the generations as heirlooms. That’s pure gold to many!
As for why now, gold has often been thought to hedge against inflation thanks to an average daily trading volume of US$183 billion. While some thought cryptocurrency would take gold’s place, it turns out no, with its performance mirroring the January tech stock tank. But it seems there may yet be gold in them thar hills. Despite Warren Buffett’s repeated nugget that gold is an asset with ‘no utility’, it hasn’t stopped him digging into the shiny asset’s potential. Good as gold. 👌