Gold and shares like Newcrest Mining Limited (ASX: NCM) have captured the imagination of people for thousands of years.
It is said to be the one true money and is thus viewed differently to paper currencies. It is also a thing of beauty, treasured as jewellery and as a valuable gift for major family events.
Gold has always been a store of value, retaining a purchasing power for the longest time of any form of money — and it does not rely on the backing of any government or institution. How fantastic!
What Gold Means For Investors
The theory seems to say that gold is a safe haven amidst market volatility. When share markets fall in value, gold seems to go up. I suppose it is a self-fulfilling prophecy if people believe that is the case and act on it.
So is now the right time to buy gold?
Don’t you think the idea of owning physical gold bars is so cool? I certainly do. However, the logistics behind storing it and keeping it safe can be a waste of time.
A minimally better idea than owning physical gold could be investing in gold miners, such as St Barbara Ltd (ASX: SBM), Newcrest Mining Limited (ASX: NCM) or Northern Star Resources Ltd (ASX: NST).
Each gold miner has their individual merits and faults. Each have different mines with different lives and different production costs and thus should be judged in their own respect.
Let’s Get Real
But let’s forget about businesses for a moment — to be honest, gold itself is not a great investment. Though it may have slowly increased in value over the centuries, its returns have been horrendous in relation to shares. Gold does not produce any free cash flow for you, it doesn’t pay dividends and you cannot re-invest with it. So what can you do?
Honestly, not much. It just sits there. However, if you are looking for something purely as a form of wealth protection, gold may suit you. This is largely due to its low correlation with other assets.
How About Gold Shares?
If you are able to accurately time the market well and purchase gold miners at a low price and sell when terror hits the market, you could potentially do well. But as we all know, it is impossible to predict how the market is going to move, so I believe that for long-term investors like myself, you are better off seeking ASX growth shares that truly flourish year after year.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).