Gold, that barbarous relic, looks set to enjoy a prolonged period as a “go-to” asset.
That assertion might well invoke the dreaded “commentators’ curse” — especially since I am well known for my reverse Midas touch when it comes to commodity investing.
But it does seem reasonable to expect that the shoot-from-the-hip economic policies blustering out of the US — where President Donald Trump holds an almost surreal sway — will just keep coming. At the time of writing the gold price was making more than steady daily gains — 8% over a week in mid-April and a sterling 22% over six months. Over two years the gold gain is 66%, and for the really long-term bulls there has been a more than six-fold increase from levels under $500 in 2005.
There might be more to come too: I’ve seen a gold price prediction of $4,500 — from an authoritative global investment house. That would be great for local investors, who I assume still have a penchant for shares in mining groups that still operate in what was once our biggest industry.
Not that I will make a packet on further upward lurches in gold. I remain fairly light on gold with my only exposure being small positions in Pan African Resources and US-listed Wheaton Precious Metals. Yup, I sold my AngloGolds way too early.
Interestingly, I was reminded that Rupert family-controlled Reinet holds 230,000 shares in the SPDR Gold Shares ETF, which offers exposure to physical gold. This investment is certainly turning out a lot better than Reinet’s flirtation with diamonds.
Currently Reinet is awash in cash after selling off its remaining holding in cigarette giant British American Tobacco. It will be interesting to see if the investment house — which, one should remember, was set up to primarily to protect capital — has increased its exposure to SPDR.
Perhaps more fascinating to gauge will be the gold mining groups’ expansion plans and appetite for corporate action. Many a strategic stuff-up has been made when commodity cycles are topping out.
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