Why investing in gold this year can be profitable?

January 09, 2022 11:50 AM AEDT | By Priya Bhandari
 Why investing in gold this year can be profitable?
Image source: Alexander Limbach,Shutterstock

Highlights

  • The year 2021 has been one of the most disappointing years for profit-seeking gold investors after a massive rally of five years.
  • The return in yellow metal is usually considered to be a hedge against inflation.
  • But with rising inflation globally by around 5-7%, gold almost gave marginally negative real return in 2021.

The year 2021 has been one of the most disappointing years for profit-seeking gold investors after a massive rally of five years. Although, the return in yellow metal is usually considered to be a hedge against inflation. But with rising inflation globally by around 5-7%, gold almost gave marginally negative real return in 2021, which means the biggest risk is not able to beat inflation. 

Over the last decades the return in yellow metal translated into a compound annual growth rate (CAGR) of around 5% and gold and silver even fall behind the return delivered by stock market. In January 2021, one troy ounce of gold was valued at £1,399, which dropped to £1,350 in the year ending. In March, the prices of yellow metal hit its lowest point of £1,217, which rose to £1,350 in June, before it dropped to £1244 by August and in November say a mini rally which rose prices to £1,403.

As the year 2022 is expected to witness more increase in inflation, should investors consider investing in yellow metal?

Buying gold stock rather than physical yellow metal has various advantages

© 2022 Kalkine Media®

As the world learns to live with pandemic experts recommend holding gold or gold stocks as a portfolio diversifier and at least keep a 5-7% allocation in gold as inflation hedge and to mitigate risk.  Although 2021 was a disappointing year but 2022 can be a much better year for the yellow metal as one troy ounce of gold rose by £250.  

Buying gold stock rather than physical yellow metal has various advantages such as higher total return as the cost and production is lower due to economies of scale, no storage cost, and unlike gold, gold stocks are not unproductive assets.  

Also Read: Can Bitcoin replace gold as a hedge against inflation?

Here are some of the gold stocks that you may consider investing in 2022.

  1. Centamin Plc (LON: CEY)

The current market cap of Centamin Plc stands at £1,004.03 million as of 07 January 2022. It has given a negative return of 33.40% to its shareholders in the last one year. Its YTD is 0.36% as of 07 January 2022. Centamin PLC’s shares were trading at GBX 89.14, up by 2.67%, around 10 am on 7 January 2022.

  1. Pan African Resources Plc (LON: PAF)

The current market cap of Pan African Resources Plc stands at £335.14 million as of 07 January 2022. It has given a negative return of 32.15% to its shareholders in the last one year. Its YTD is 5.63%. Pan African Resources PLC’s shares were trading at GBX 17.56, up by 1.04%, around 10 am on 7 January 2022.

  1. Condor Gold Plc (LON: CORA)

The current market cap of Condor Gold Plc stands at £43.99 million as of 7 January 2022. It has given a negative return of 41.94% to its shareholders in the last one year. Its YTD is 4.75%. Condor Gold PLC’s shares were trading at GBX 30.50, up by 1.67%, around 10 am on 7 January 2022.

Also Read: Coro Energy, Wishbone Gold & Prime People: 3 AIM stocks to buy

  1. Antofagasta Plc (LON: ANTO)

The current market cap of Antofagasta Plc stands at £13,092.18 million as of 07 January 2022. It has given a negative return of 14.33% to its shareholders in the last one year. Its YTD is 1.31%. Antofagasta PLC’s shares were trading at GBX 1,357.50, up by 2.22%, around 10 am on 7 January 2022.

 

  1. Greatland Gold Plc (LON: GGP)

The current market cap of Greatland Gold Plc stands at £619.12 million as of 07 January 2022. It has given a negative return of 56.79% to its shareholders in the last one year. Its YTD is -4.40%. Greatland Gold PLC’s shares were trading at GBX 15.05, down by 1.63%, around 10 am on 7 January 2022.

Also Read: Top 7 gold stocks of 2021


Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (Kalkine Media, we or us), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.


AU_advertise

Advertise your brand on Kalkine Media

Sponsored Articles


Investing Ideas

Previous Next
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.