Listed gold miners more attractive than ever, says leading investment trust

Gold mining company stocks are currently looking more attractive than ever, according to specialist investment trust Baker Steel Resources PLC.

The worldwide shutdown in economic activity stemming from the COVID-19 (coronavirus) outbreak has provided strong signs that gold is at the start of a major upcycle, the London-listed fund said in a release yesterday.

Though gold mining shares have made a strong recovery since lows seen last month, valuations remain far below historical levels relative to the price of the metal itself, Baker Steel added.

“The spread between gold equities and the gold price has reached extreme levels, with miners’ share prices largely still the same as when the gold price was just $1400/oz.” The current gold spot price is around US$1,700 per oz.

Earlier this week, Bank of America predicted that gold would exceed $2,000 per ounce next year and might even reach $3,000 per ounce over the next eighteen months.

However, Baker Steel said that even at the current price miners are set to become attractive dividend payers as they distribute more of their earnings.

Yesterday, US gold mining giant Newmont increased its quarterly dividend by 79%, having seen its share price rise by a third since the start of 2020.