Updated: Apr 21
We are seeing the best equity investment period since the 1980s
2020 has been one of major upheavals throughout the world. Amidst the chaos, we are now finally seeing the bright lights at the end of the tunnel. Noel Ong from Samso has been keeping a cool head on solid shoulders and he assures us that the lights are bright. He has been giving Brilliant-Online his classic insight into the mind boggling world of numbers and graphs.
For investors or traders within the Australian Stock Exchange (ASX), they have experienced one of the greatest shows of the last thirty years.
Get ready for the ASX show
Bonus: Samso managed to secure 30 passes for our investor followers and friends so that you can attend this RIU Sydney Resources Round-Up conference on 4, 5 & 6 May for free. Each conference ticket is $1,375.
Conference passes are given away while available and at the discretion of Samso, the event organiser, RIU Conferences and publication partner Brilliant-Online.
The recent GameStop squeeze in the US market is an example of how retail investors are swamping markets all over the world.
Believe it or not, this has been the best time to take that punt in a stock. From an investment point of view. It is certainly not something anyone would have expected while in the midst of battling a pandemic. There may be that rare few who have had an inkling of what was to come. With all that was happening due to COVID-19, this certainly comes as a surprise to know that it is a fertile time for investments.
Figure 2: Stock Exchange Index (source: www.igmarkets.com)
The charts in Figure 2 show why the equity markets have been a spectacular place to grow some money. Be careful though, as the trend may still be going up but the gold sector has not performed too well in certain weeks.
Noel explained to us about the charts in Figure 4, where one can see that the gold companies were almost at the same level as 12 months ago. And that was when the whole COVID-19 pandemic was starting to turn ugly. The gold equities have retreated and may be time for re-entry.
Go for Gold … or Not?
In the precious metals sector, there is a definite pullback for gold equities, but when we look at the physical gold price, it has not pulled back that much (Figure 3). Interestingly enough, the gold price in AUD may have dropped, but the producers are still making a lot of margins. At the most expensive AISC, we are still looking at a margin of around AUD$800 per ounce. Even at AUD$500, they are making good money.
Figure 3: Price of spot gold since 2019.
Noel's take on gold is that its movement is going to be dependent on how the market views all the stimulus that has been happening. It also pays to keep an open mind on what is in store in the coming years.
Simply put, the pandemic has made free-flowing money seem like an everyday occurrence.
For those of you who are more of a traditionalist, this is a sure sign of inflationary issues. In this case, you would hedge your bet that the gold price should rise.
Figure 4: The share price journey of Mid-Tier Australian gold producers and a
near-to-production company (ASX: CAI).
Gold has been in the spotlight in the market for the last 12 months. Perhaps it is time for it to take a step back from the limelight. Noel