Gold as an investment vehicle, has had a long history even older than any stock or debt instrument. Its investment value is very much related to its other characteristic of being a storage of wealth. Its universal acceptability as a payment for anything gives it a value higher than any other commodity known to mankind for a very long time. It is often regarded as a safe investment, which does not lose it sheen with the ups and downs of economic activities and as such possesses excellent risk-hedging properties. Given such characteristics, the business of prospecting, exploration and extraction of this metal from its mineral ores is highly rewarding. Below are three different ways one can invest and benefit from gold other than physical buying and selling.
Investing in gold mining companies
An investor may invest in these companies not only to benefit from price rise of gold but also from the production company’s rise in profitability. Below are five companies listed on the London Stock Exchange which are producers of Gold.
- Pure Gold Mining Inc
Pure Gold Mining Inc is a Canadian mineral exploration and development company with a focus on Gold. The company is engaged in the acquisition, exploration and development of mineral properties or interests in companies controlling mineral resources. The company’s flagship project is the Madsen Gold Project, which is located in North-western Ontario, Canada in the Red Lake greenstone belt. The site has been hosting several other prior mining ventures and still promises to hold significant mineralised deposits of the yellow metal.
The shares of the company are listed on the main market segment of the London Stock Exchange where they trade with the ticker name PUR.
- Highland Gold Mining Limited
Highland Gold Mining Limited is a Jersey-based gold mining and production company with mining interests in Russia. The company’s mining interests are in the region of Mnogovershinnoye and Belaya Gora, and the names of the licenced mines are Taseevskoye, Unkurtash, Lubov, Kekura and Klen.
The shares of the company are listed on the London Stock Exchange on the Alternative Investment market (AIM) segment. There they trade using the ticker name HGM.
- Cora Gold Limited
Cora Gold Limited is an exploration stage gold mining company. It has several projects under various stages of development in Mali and Senegal in west Africa. Three of these projects have now achieved the de-risked status; which means, the reserves at these sites are now proven after test drilling and chemical testing with high grades of minerals being discovered. The company also has an agreement with Hummingbird Resources Plc, another gold mining company in the same region whereby it has the rights to explore on the acreages owned by the latter.
The company is based out of the British Virgin Islands; however, it is listed on AIM segment at the London Stock Exchange and trades with the ticker name CORA.
- Shanta Gold Limited
Shanta Gold Limited is a Guernsey domiciled gold mining and exploration company currently having interests in production of gold in East Africa. The company owns a licence for a mine with the name New Luika project in Tanzania which started production in the year 2012 and produced 81,872 ounces of gold in the year 2018.
The Shares of the company have their listing on the London Stock Exchange on the Alternative Investment Market (AIM) segment. There the shares trade with the ticker name SHG.
- Avesoro Resources Inc
Avesoro Resources Inc is a gold mining and mineral exploration company focused on West Africa. The company operates Gold mines across West Africa with particular interest in Liberia where it operates the New Liberty Gold Mine and in Burkina Faso where it operates the Youga Gold Mine.
The Shares of the company have their listing on the London Stock Exchange on the Alternative Investment Market (AIM) segment. There the shares trade with the ticker name ASO.
- Eurasia Mining Plc
Eurasia Mining Plc is a United Kingdom domiciled mineral and metals exploration company. The company has a long-established interest in iridium, rhodium, palladium, gold and Platinum and is focused on production of these precious metals. The company has a running PGM mine in the Ural Mountains palladium open pit deposit in Russia’s Kola Peninsula called the Monchetundra project. Other than that, the company has an interest in the Semonovsky Gold in Mine Tailings Project, a resource which has demonstrated a potentially low-cost gold production potential in the near term.
The shares of the company have a listing on the London Stock Exchange in the Alternative Investment Market (AIM) segment. There they trade with the ticker name EUA.
Investing in Gold ETF
There are less risky ways to invest in gold as well. One of the ways is to invest in a Gold Exchange traded Fund or Gold ETF. This type of ETF raises funds from investors by issuing shares and invests them in gold. The investor benefits by getting a professional management for his funds plus he also gets the additional benefit of trading the shares of the ETF in a stock exchange just like they would do for stocks.
Investing in Gold Futures
This is yet another product that investors can invest in if they are interested in gold. If an investor is good with research and numbers and is able to predict the price movement of gold. This product is better aligned than all others to benefit from Gold. Though a highly risky asset class, it is extensively used by physical gold traders and Gold ETF fund managers as a risk hedging tool.
Why Physical buying and selling of gold is challenging?
Physical buying and selling of gold as an investment product is a cumbersome affair. There investor will always face the problem of taking physical possession, storage and delivery of the commodity while taking advantage of the dynamic state of price movement. Secondly consumer gold market price trend is different from that of the bullion market and may pose the challenge of appropriate price discovery, thereby heightening the risks of making such an investment.
Gold price trend in 2019
Gold Prices have consistently been rising over the past one year; the adverse macro- economic climate in Europe and the UK on account of Brexit, the tariff war situation brewing between China and the United States of America and the slowing down of the Chinese economy have all made the global economic outlook weak. This had made investors look for alternative safe havens to park their funds, which is a partial reason for the strengthening of prices of this commodity. The price of gold on the London Metal exchange at the close of trade on 7 November 2019 was US$ 1466.10 per ounce. The one-month forward prices as on the same day was US$ 1466.70 per ounce, six-month forward prices as on the same day was US$ 1479.40 per ounce, twelve-month forward prices as on the same day was US$ 1493.10 per ounce and the twenty four month forward prices as on the same day was US$ 1515.70 per ounce. It can be interpreted that gold price outlook is steady for the coming year.