Gold Miners Emerge as Safe Havens for the Investors During the Coronavirus Crisis

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Gold Miners Emerge as Safe Havens for the Investors During the Coronavirus Crisis

 Gold Miners Emerge as Safe Havens for the Investors During the Coronavirus Crisis

Summary

  • Gold investments and stock markets during the pandemic showed a strong relationship
  • Gold prices recorded a fresh 7-year high in April, as it is said that prices tend to move north during crisis
  • Greatland Gold Plc has yielded a price return of more than 550 per cent during the coronavirus crisis

Since centuries, the precious metal, Gold is regarded as an investment bet which appreciates over a period. Alternatively, the precious metal is also considered as a store of value, which could be redeemed during the crisis. This was one of the reasons that the currency of countries was backed by gold deposits decades ago. Even today in some countries, Household consumption of Gold is much higher than Industrial consumption.

This implies that investors feel secure in parking surplus or contingency funds in Gold as it tends to store the value. The prime objective for investors turning to Gold is the safety of capital, while appreciation on Gold investment remains secondary for them.

According to market experts, unlike stock markets, Gold prices tend to move north during crucial times of crisis. The outbreak of the novel coronavirus started in Wuhan (China) in the last week of December 2019. Since then, the global stock markets have gone through extreme carnage by the pandemic. These markets lost a lot of wealth, leaving investors emotionally and financially hurt.

It has been a double whammy for the global stock markets. Firstly, the economic activities came to a screeching halt due to the pandemic, then due to the travel restrictions, the demand for oil slumped which has left the oil industry and related economies on the brink of collapse.

On the flip side, Gold prices which were hovering just over US$1500/oz by the end of January 2020, skyrocketed to over US$1700/oz by mid of June. This translates to a double-digit return of over 13 per cent in a duration of just five months. Historical evidence suggests that the Gold prices have risen in the past as well whenever the stock markets have suffered a severe correction. In addition, Gold prices struck a new seven-year high in April, since November 2012.

Recently, a sudden spike in coronavirus cases in the US and the Asia Pacific regions along with a gloomy outlook for the year shared by the US Fed, sent jitters to the stock markets as they feared a second wave of the pandemic. The slower reopening of economy, piling debt levels and consistent job redundancies would possibly fuel more inflation by the end of this year. These sort of pressure on the stock markets is likely to help Gold and related safe-haven investments.

Gold stocks are a preferred mode of taking exposure in Gold as an asset class. The Gold stocks and related investments tend to resonate the prices of Gold as a commodity; however, this might not always be true. Gold stocks refer to Gold mining businesses which have always been a complicated one with many unseen uncertainties that might come in to play in the normal course of operations.

In this article, we would be discussing some gold miners who have yielded triple-digit returns during the unprecedented crisis caused by the novel coronavirus. (All data figures are taken from Thomson Reuters.)

Greatland Gold Plc: YTD Total Return- 566.70%

London-headquartered Greatland Gold Plc (LON: GGP) is a precious metals mining and development company with profound assets in Western Australia and Tasmania.

  • Greatland Gold Plc shares were trading at GBX 12.25 at the time of writing before the market close (at 11:36 AM GMT+1) on 17th June 2020, up by 2.08 per cent versus the previous day closing price. Stock's 52-weeks High is GBX 12.68, and 52-weeks Low is GBX 1.50. Greatland Gold Plc’s market capitalisation stood at £444.58 million. The stock delivered a YTD Total return of 566.70 per cent.

Altyn Plc: YTD Total Return- 217.10%

Altyn Plc (LON: ALTN) is the UK based precious metals miner with deep assets in Kazakhstan.

  • Altyn Plc shares were trading at GBX 1.75 at the time of writing before the market close (at 11:39 AM GMT+1) on 17th June 2020, up by 7.69 per cent versus the previous day closing price. Stock's 52-weeks High is GBX 1.68, and 52-weeks Low is GBX 0.35. Altyn Plc’s market capitalisation stood at £41.91 million. The stock delivered a YTD Total return of 217.10 per cent.

Petropavlovsk Plc: YTD Total Return- 112.30%

Petropavlovsk Plc (LON: POG) is a London-registered Russian gold mining company with operations in the Far East of Russia.

  • Petropavlovsk Plc shares were trading at GBX 27.15 at the time of writing before the market close (at 11:43 AM GMT+1) on 17th June 2020, up by 0.37 per cent versus the previous day closing price. Stock's 52-weeks High is GBX 27.80, and 52-weeks Low is GBX 8.70. Petropavlovsk Plc’s market capitalisation stood at £ 895.41 million. The stock delivered a YTD Total return of 112.30 per cent.

Goldplat Plc: YTD Total Return- 108.70%

UK based AIM-listed Goldplat Plc (LON: GDP) is involved in the production of gold and other precious metals, by processing by-products.

  • Goldplat Plc shares were trading at GBX 5.40 at the time of writing before the market close (at 11:45 AM GMT+1) on 17th June 2020, down by 0.46 per cent versus the previous day closing price. Stock's 52-weeks High is GBX 7.13, and 52-weeks Low is GBX 2.35. Goldplat Plc’s outstanding market capitalisation was hovering around £9.08 million while writing. The stock delivered a YTD Total return of 126.04 per cent.

Katoro Gold Plc: YTD Total Return- 94.60%

The UK based Katoro Gold Plc (LON: KAT) is a mining and exploration company which has mining assets in Tanzania.

  • Katoro Gold Plc shares were trading at GBX 1.90 at the time of writing before the market close (at 11:50 AM GMT+1) on 17th June 2020, up by 5.56 per cent versus the previous day closing price. Stock's 52-weeks High is GBX 4.35, and 52-weeks Low is GBX 0.85. Katoro Gold Plc’s market capitalisation stood at £4.51 million. The stock delivered a YTD Total return of 94.06 per cent.

Stock price comparison chart of Gold miners: GGP, ALTN, POG, GDP, and KAT

(Source: Thomson Reuters)

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