Connect with us

Business

Phuket Investor: The alternative gold rush

Published

 on 

PHUKET: With all the economic strife the world has seen over the past 12 months, I feel as if I’ve turned into a portrayer of doom. So, I’m taking the doom gloves off and jumping on the feel good train, which seems to have hit the European markets this last couple of weeks.

I’m not saying that the problems have gone, far from it, but at least wheels have been put in motion that should stabilize the financial markets in the short term.

The Eurozone’s agreement to further prop up the banking system has given us a small respite from all too familiar financial ruin stories.

However, one thing has come to my attention. Even through all this economic turmoil there are still a few decent bets out there that could potentially turn out a satisfactory profit.

The meteoric rise of the price of Gold over the last few years has been nothing short of astounding – however a correction does seem to be underway. Even though the price of Gold has risen sharply, one area that hasn’t had the same turbo charged boost is the Gold mining companies. This now is beginning to look like a very attractive area for investment.

The graph on the right shows an example of how a selection of Gold mining companies have further lagged behind the physical gold price, and thus, this in itself provides an opportunity for significant rises.

Gold mining stocks have taken a real hammering recently and there are clearly some valid reasons why you should be cautious about gold companies. Many of the major mining companies made a stupid decision a few years ago to hedge their reserves, by selling gold futures (contracts to deliver a certain amount of gold in the future). This locked them out of rising prices.

Also, Asian demand for gold, one of the key drivers of the soaring price, could be hit if China makes it harder to buy gold, or India imposes a rumored tax on jewelery.

All this aside however, it would seem that since April, gold mining stocks, like other mining industry stocks, have underperformed the underlying metal.

In our view, this kind of under-performance is only partly explained by stock-specific issues and by a general trend towards higher industry costs. Despite rising industry costs, we have seen expanding margins in the gold industry, leading to significant improvements in return on equity for gold miners for the first time in many years.

There is an expected rebound in gold mining equities, as the gap between equities and the underlying metal has widened to unsustainable levels. Gold mining stocks are showing very attractive valuation fundamentals, with the market apparently ignoring current gold prices.

These attractive valuation fundamentals could herald an excellent buying opportunity in general. A potential near term re-rating of up to 20%, particularly for the larger gold players.

This is one area I’ll certainly be keeping a close eye on, and in my view could potentially be a wise choice in helping a flagging portfolio get back on track.

For any information relating to Gold mining stocks please contact Alyman@montpeliergroup.com. Anthony Lyman is a Senior Financial Consultant with the Montpelier Group.

— Anthony Lyman

 

Get more from The Thaiger

Join the conversation and have your say on Thailand news published on The Thaiger.

Thaiger Talk is our new Thaiger Community where you can join the discussion on everything happening in Thailand right now.

Please note that articles are not posted to the forum instantly and can take up to 20 min before being visible. Click for more information and the Thaiger Talk Guidelines.

Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

Follow Thaiger by email:

Thailand10 hours ago

Thailand News Today | Storm Noru causing floods, death in northeast Thailand

Thailand11 hours ago

Airspace over Bangkok airport closed for airforce parade

Phuket11 hours ago

Four alleged investment scammers arrested in Phuket

Sponsored1 day ago

Segafredo Zanetti Coffee teamed up with Bangkok Airways and hosted “Bangkok Airways Surf Festival 2022”

Thailand11 hours ago

1 year old child allegedly snatched while parents slept

Air Pollution11 hours ago

For health reasons – Bangkok’s proposed congestion charge

Bangkok11 hours ago

As rain pours down on northern Thailand, Bangkok ups its canal drainage

Join the conversation on the Thaiger Talk forums today!
Cannabis12 hours ago

Traditional Thai medicine clinics offering cannabis treatments in Thailand

Health12 hours ago

Fizz buzz – Will kratom drinks ever hit the spot?

Patong13 hours ago

Four suspects admit they assaulted US tourist in Patong

Hot News13 hours ago

Doctor’s “sorry, not sorry” attitude after alleged hit-and-run of students lands him in hot water

Thailand13 hours ago

Police ignore cheating antics of drunk Bangkok cabbie

Pattaya13 hours ago

Third baby elephant of the year born at Pattaya garden

Thailand14 hours ago

Thai doctor warns against eating bats after ‘bat hunter’ sells for 100 baht per kilo

World14 hours ago

Kamala Harris visits South Korea a day after North Korea fires missiles

Events14 hours ago

Spartan Race to hit Phuket in November

Thailand1 year ago

Morning Top Stories Thailand | Police to end protests, Human Trafficking | September 14

Thailand2 years ago

Thailand News Today | Thai Airways in rehab, All go for Songkran | March 4

Tourism2 years ago

Phuket’s nightlife. Yes, bars and clubs are still open | VIDEO

Phuket2 years ago

Thailand News Today | Covid passport talks, Thai Airways heads to court | March 2

Tourism2 years ago

Phuket Thai food treats you need to try | VIDEO

Thailand2 years ago

Thailand News Today | Bars, pubs and restaurants ‘sort of’ back to normal | Feb 23

Tourism2 years ago

In search of Cat & Dog Cafés in Phuket Town | VIDEO

Thailand2 years ago

Thailand News Today | Gambling crackdown, Seafood market to reopen, Vlogger challenge | Jan 21

Thailand2 years ago

Thailand News Today | Covid testing for visas, Business impact, Vaccine approval | January 19

Thailand2 years ago

Thailand News Today | Weekend Bangkok bombs, Thailand fires, Covid update | January 18

Thailand2 years ago

Thailand News Today | Stray car on runway, Indonesian quake, 300 baht tourist fee | January 15

Thailand2 years ago

Thailand News Today | Governor off respirator, sex-trafficking arrest, condo prices falling | January 14

Thailand2 years ago

Thailand News Today | Chinese vaccine, Thailand ‘drug hub’, Covid update | January 13

Thailand2 years ago

Thailand News Today | Bangkok may ease restrictions, Phuket bar curfew, Vaccine roll out | January 12

Thailand2 years ago

Thailand News Today | Covid latest, Cockfights closed down, Bryde’s Whale beached | January 11

Trending