Investment Theme

Over the last couple of months, we have seen a clear lift in interest in the gold sector, in our view driven by a number of factors.

 

1. Diversification and portfolio protection in the face of high equity market valuations and gold’s role as an inversely correlated asset class and long-term store of value. This negative correlation strengthened as global equity markets fell from their September 2018 highs. 

2. Global trade restrictions and economic uncertainty have seen growth expectations tempered. As a result, we have seen a weaker US dollar, reduced inflation expectations and real interest rates falling from +10yr highs. The weakening dollar and dropping real interest rates have in particular been helpful catalysts for the gold price over the last couple of months; and

3. A more dovish outlook from the US Federal Reserve in December, with the outlook for interest rate hikes for 2019 and 2020 lowered vs expectations earlier in 2018, following commentary that policy settings were approaching a neutral level and the implication that the end of the monetary policy tightening cycle is closer.

While we do not yet see the ingredients for a raging bull market, there are plenty of positive signs and our Heat Map shows the bulk of performance has been in the larger names – leaving the mid-size producers plenty of catching up to do.

In our 'Gold Tracker report', we run through our current coverage, our quarterly production monitor, key company releases (including Substantial Holding Notices), a gold-producers’ comparison table, a gold equities performance “heat-map” and some key price and relative value charts. You can access the report here



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Mark Dawson

Thanks David, I've enjoyed reading your article and access to Bell Gold Tracker report. Another Gold stock you maybe interested in is Aurelia Metals (AMI) with a market cap of $673m. Aurelia owns gold producing mines at Nymagee and Peak Gold.