- Rising inflation and a weakening pound have led to volatility in the UK markets.
- Investors often consider gold stocks as inflationary hedge.
The UK inflation has been touching record highs for some time and is expected to rise further in the coming months. The Chancellor's mini-budget last month sent the country's financial markets into a tizzy, pushing the pound sterling to a record low against the US dollar. In such market volatility situations, many turn to gold.
During economic uncertainties, the demand for gold increases as it is considered an inflation hedge. Since it offers long-term value, it creates a perception of safety among investors during such times.
© 2022 Kalkine Media®
In fact, investors have been piling into gold so much that the Royal Mint, the official maker of UK coins, has reported record profits in the year to March. With pre-tax profits of £18 million, the company posted sales of £1.2 billion during the period. This is an almost 50% or £6 million jump in profits from last year's £12.4 million.
About 86% of the company's total revenue last year came from precious metals as traders rushed to hedge their portfolios against the market volatility.
Kalkine Media® looks at some FTSE-listed stocks in the wake of this information.
Endeavour Mining Plc (LON: EDV)
The multinational mining company belongs to the blue-chip FTSE 100 index and enjoys a market cap of £3,653.92 million. It owns and operates gold mines in several African countries, including Cote d'Ivoire, Senegal, and Burkina Faso. It has offered a negative return of -16.64% to investors over the past year and -10.84% on a YTD basis. EDV shares traded at GBX 1,487.00, up 0.41% as of 8:28 am GMT+1 on Friday.
Centamin Plc (LON: CEY)
The FTSE 250-listed gold miner primarily focuses on the Arabian-Nubian Shield. It has a market cap of £981.36 million and currently holds an EPS of 0.09. Its 12-month and YTD returns are at -14.22% and -4.66%, respectively, and the turnover (on the book) is £43,089.07. CEY shares were down 0.21% at GBX 84.68 as of 8:33 am GMT+1 on 14 October.
Caledonia Mining Corporation Plc (LON: CMCL)
The FTSE AIM All-Share listed gold mining company's share price stood at GBX 910.00 as of 8:37 am GMT+1 on 14 October. It holds a market cap of £116.78 million, and its 12-month return stands in the negative territory at -6.18%. The YTD return currently stands at 1.45%. The company has an EPS of 1.49.
Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.