A 360-Degree View on Gold; Alice Queen Riding High on Legacy Asset Class

  • Dec 16, 2019 AEDT
  • Team Kalkine
A 360-Degree View on Gold; Alice Queen Riding High on Legacy Asset Class

Gold is a strategic asset that is bought as a luxury good as well as an investment by a diverse set of consumers and investors.

As the global gold market is flourishing, let us zoom our lens to have a 360-degree view on gold – the safe haven.

Gold Prices – Prices of gold surged by 30.98 per cent from USD 1180.4/Ounce in August 2018 to up to USD 1546.1/Ounce in September 2019. This spike can be attributed to various factors including gold purchase by the central banks, interest rate changes being introduced by the US Federal Reserve, and global economic outlook by the International Monetary Fund, geo-political events such as the US-China trade war, Brexit, turmoil in Hong Kong.

Gold Demand – There are diverse uses of gold. The jewellery segment accounts for the largest demand for the precious metal, with Asian countries like China and India capturing the maximum demand. Albeit the higher gold prices tend to discourage the jewellery sales.

Gold is used in low volumes in technological applications, as a result its impact also varies; however, with technological advancements, gold application is gaining traction in engineering, medicine and several other areas.

As mentioned above, central banks play a major role in gold demand, as over the period central banks in the emerging markets have significantly boosted their purchase of gold.

In the last decade, East with the most dynamic and rapidly growing economies emerged as the major market for gold, on the back of cultural affinity, creation and income growth.

Gold Supply – As the price of gold is going up, miners are also getting keen to supply more to cater towards the increased demand. Meanwhile, miners are injecting funds in new projects.

Gold production from mining activities account for nearly 75 per cent of gold supply on a yearly basis. The shortfall in demand is met through recycling of gold, with around 90 per cent of the recycled gold coming from jewellery.

Do Read: Gold Price: Unappreciated or Appreciated

Gold Regulations – There are no regulations on gold; however, almost every country has national mining/exploration laws in addition to regulations that specifically cover the responsible sourcing of gold. Moreover, some part of the market infrastructure that deals with the gold purchase and sale is also regulated.

Meanwhile, gold is subject to several taxes and royalties, varying widely from country to country.

Gold Investment – Directly holding gold i.e. physical investment either in gold coin or bar is one way of gold investment, while the other way is indirectly holding funds backed by gold (Exchange Traded Fund (ETF)).

On a global level, ETFs are more popular than the physical gold investment, as they are easier to liquidate and carry calculative risk.

Gold stocks in a portfolio can play 4 fundamental roles:

  1. An asset liquid in nature
  2. A source of returns in the long run
  3. A diversifier capable of mitigating losses in times of market uncertainty
  4. A way to boost overall portfolio performance

With this backdrop, let us discuss ASX-listed advanced gold and copper explorer, Alice Queen Limited (ASX: AQX), which is focused on developing several exploration and mining opportunities related to assets - gold and copper.

The company has major projects in Queensland and New South Wales, Australia.

2019 was a significant year for Alice Queen. Below picture demonstrates the significant progress made by the company during the year.

Horn Island is the company’s flagship gold project for which Alice Queen at the end of November 2019 received encouraging results.

Do Read Alice Queen Announces Encouraging Results for Horn Island Geochemical Sampling Program, Stock Up Over 17%

Recently, Alice Queen also updated the market with the recommencement of drilling activities at its New South Wales project - Yarindury Project, with focus on 11 targets. For a detailed look, pls click here.

Stock Price Information – With a market capitalisation of $ 23.94 million, the stock of AQX last traded at $ 0.030 on Friday, 13 December 2019. The total outstanding shares of the company stands at 798.04 million. Over the last one year, six months and three months, the stock has delivered excellent returns of 130.77 per cent, 100 per cent and 50 per cent, respectively.

The excellent returns of the company over the past few months, along with the significant progress of key projects highlight the potential that Alice Queen holds as an attractive player in its market.


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