Generally, gold is seen as a defensive asset; the commodity investors turn to when times get tough.

But lately, with interest rates low and inflation lagging, Shaw and Partners senior investment adviser Adam Dawes said gold has potentially taken “a bit of a backseat” and Bitcoin has a lot to answer for.

“I think people are now seeing Bitcoin — not just Bitcoin but all cryptocurrencies — as a store of value, which traditionally was something that gold would do,” he said.

“A lot of that money now has been moved into the crypto space. Plus gold is now traded by ETFs and that would have potentially created a liquidity event to start with, but now it has shaken-up the supply and demand of gold.

“It means that gold has become more of a speculative investment versus a store of value or a defensive asset.”

Nonetheless, there remains a place in any portfolio for gold. It is held by central banks, has a long history of being an investment grade product in the wider community and tends to perform well in a risk-off environment.

“Gold stocks are a buy,” Dawes said.

“Our analyst has recommended Northern Star (ASX:NST) and Newcrest (ASDX:NCM) in the big space – he sees that they are oversold, and he can see that going forward, if some of these world events like inflation and interest rates start to rise, then it’s a good time to start looking at gold stocks for the future.”

 

Gold picks from the experts

GAVIN WENDT, founding director and senior resource analyst at MineLife

GOLD PRICE FORECAST: $US1,800/oz in the near-term before easing higher towards $1,900/oz into 2022

FAVOURITE STOCKS: West African Resources (ASX:WAF) and Trek Metals (ASX:TKM)

“West African are a really interesting one – I’ve been following this company since 2015, and back then it was about 8 cents,” Wendt said.

“WAF has set another quarter of record production at the Sanbrado Gold Operation in Burkina Faso and are now in the phase of ramping up production.

“Investors love a story where a company starts off as a micro-cap exploration company and make it all the way through to the production stage.

These guys have managed to transition all the way through from exploration to producer and their share price suggests that the market really likes what they are doing.”

“Trek, from Western Australia, are a grassroots exploration company with a very modest market cap.

“What I like about them is that they have some really nice exploration projects.

“They were trading just under 7 cents in November last year and on September 16 they were trading at 12 and they’ve recently released an exploration update and shares went up again to 14 cents.”

WAF, TKM share price charts

 

 
ARTHUR GARIPOLI, senior investment adviser at Seneca Financial Solutions

GOLD PRICE FORECAST: Above $US2,000/oz by year-end with upside risk into 2022 if inflationary expectations continue to rise

FAVOURITE STOCKS: Northern Star (ASX:NST) and Newcrest Mining (ASX:NCM)

“Our top pick would be Northern Star, the second largest gold producer on the ASX which is particularly well managed,” Garipoli said.

“Management is looking to turn around the operational performance at their Pogo asset and cut costs to deliver greater margins, which we see as a catalyst for the stock to move higher.

“Investors shouldn’t also neglect Newcrest, which is a globally significant gold miner and the lowest cost producer on the ASX.

“NCM delivered a strong result recently and paid a record dividend.

“The company has three major growth options going forward including Red Chris, Havieron in WA and ramping up at Lihir Ph14A.

“It is important to note that market sentiment can change very quickly in the gold space and investors need to be comfortable with heightened volatility in this sector.”

NST, NCM share price charts

 

 
JOHN SO, co-founder and portfolio manager at VP Capital

GOLD PRICE FORECAST: $US1,850/oz over the next 12 months

FAVOURITE STOCKS: Perseus Mining (ASX:PRU) and Firefinch Ltd (ASX:FFX)

“PRU has been operating for a number of years in West Africa and it recently started production at a third mine called Yaouré, so I think we are going to see continued ramping up at that asset and as a result the group AIC is going to come down in the next six to nine months,” So said.

He said in comparison to its peers the stock was trading cheaply, partly because this part of the world (Africa) tends to trade at a discount compared to gold companies in North America or Australia.

“Another company on my radar is FFX – its Morila gold mine, also in West Africa, was historically a very large gold mine that has mined more than seven million ounces,” So said.

“It was bought on the cheap by Firefinch recently and all the infrastructure is there, including plant and all the equipment.

“There are enough reserves supporting a mine life of at least six to seven years if not longer based on mining out the reserves, at 150,000 ounces per annum or more, which management is targeting to commence in the second half of 2022.”

“The other interesting angle about FFX is that there is a demerger happening where they also have a lithium asset in Mali that is going to be spun out.

“There is an underwritten evaluation for which this lithium asset probably should trade on because the offtake partner has committed to a 50% stake for around A$180 million.”

PRU, FFX share price charts


JAMES WHELAN, investment manager at VFS Group Global Macro Fund

GOLD PRICE FORECAST: $US3,000/oz over the next 12 months

FAVOURITE STOCK: Nova Minerals (ASX:NVA)

“Nova has the most capacity for upside based on what they have under the ground, based on where the gold price is and based on where the gold price will be soon,” Wheelan said.

“They also have some ripping grades out – I have a gold guru that I send these things to for a sanity check and he simply responded with ‘wow’.”

NVA share price chart

 

DAVID BOSIO, WA state manager and director corporate finance at Shaw and Partners

GOLD PRICE FORECAST: $US2,200/oz over the next 12 months

FAVOURITE STOCKS: Matador Mining Ltd (ASX:MZZ) and Black Cat Syndicate (ASX:BC8)

“Matador Mining is exploring for gold in the Cape Ray Shear in Newfoundland, Canada,” Bosio said.

“Recent results are highly encouraging and there is an active program planned for the remainder of the year and into 2022.

“The company is well funded with a cash position of A$24 million post a recent equity raise.

“And Black Cat is the other – the company’s flagship Kal East Gold Project contains a combined JORC 2012 mineral resource of 17.5 milion tonnes at 2.1 g/t gold for 1.2 million ounces.

“The company has $16.05 million cash on hand and during the June 2021 quarter, Black Cat raised $20 million via a share placement.

“Directors and their related parties subscribed for around $1,500,000 in the placement bringing their total investment to about $5.5 million.”

MZZ, BC8 share price charts