- The first safe haven asset that comes to mind during times of market instability is gold.
- The total returns generated by gold companies are comparatively much higher than the returns from the physical gold.
During times of market instability, the first safe haven asset that comes to mind is gold. The yellow metal has been known to act as a hedge against soaring inflation, as well as other factors like geopolitical issues and economic slumps. So far in 2022, gold prices have fluctuated, rising by double digits, due to the Russia-Ukraine war as well as the global inflationary trend.
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Even though the physical metal is considered to be quite valuable, investing in gold stocks can prove to be more beneficial than buying the physical metal for a variety of reasons. The total returns generated by gold companies are comparatively much higher than the returns from the physical gold. The main reason for this is that the production by gold companies can be expanded, which in turn leads to a reduction in overall costs, and this efficiency of production is known as economies of scale.
Gold mining companies have the potential to surpass gold prices. However, this isn’t true for all gold stocks, and thus it is important for investors to carefully analyse the performances of the gold companies before investing in them.
Here are 3 gold stocks that investors can keep an eye on.
Pan African Resources plc (LON: PAF)
The shares of African-focused gold producer, Pan African Resources plc, were down by 3.00% at 9:58 AM (GMT+1) on 7 April 2022, at GBX 22.60. The FTSE AIM UK 50 Index constituent has performed well lately, and it has given its shareholders a return of 30.25% over the last one year as of 7 April 2022. The current market cap of the company stands at £449.30 million.
Caledonia Mining Corporation plc (LON: CMCL)
The shares of the gold ore mining firm, Caledonia Mining Corporation plc, were trading GBX 1,115.00 at 10:04 AM (GMT+1) on 7 April 2022. The AIM constituent has given its shareholders a return of 1.80% over the last one year as of 7 April 2022. The current market cap of the company stands at £143.09 million.
Endeavour Mining plc (LON: EDV)
The shares of the globally operating gold mining company, Endeavour Mining plc, were up by 0.21% at 10:10 AM (GMT+1) on 7 April 2022, at GBX 1,902.00. The FTSE 100 constituent got admitted to the LSE recently in June 2021 and has performed well lately, with its year-to-date return standing at 13.71% as of 7 April 2022. The current market cap of the company stands at £4,716.09 million.