Australia has been a major gold producer since the 1850s and as a consequence of this Australia’s stock exchanges have almost always had a gold component to them. Since the 1970s that component has been quite substantial.
Golden days ahead
In 2020, Australia is the world’s second largest producer after China. So while the world’s largest gold miners today are based in the US, Canada and South Africa, Australia is home to Newcrest Mining (ASX: NCM) as well as dozens and dozens of smaller companies whose business is either mining gold, getting ready to mine it or exploring for it.
Indeed, ASX today is arguably the world’s leading capital market for gold-related equities, having in recent years surpassed Canada’s TSX and TSX-V.
To US$2,000 an ounce…and beyond?
For a while now we at Pitt Street Research have been of the view that gold is headed to US$2,000 an ounce. Our basic thesis on gold as 2020 got started was that there is too much trouble in the world and too much fiat currency being printed on top of all that trouble to ostensibly keep us from sinking.
And when there’s trouble in the world, the price of gold goes up. The current Coronavirus Crisis has only enhanced this view. Indeed, we believe gold will reach and surpass US$2,000 an ounce.
Plenty of ASX-listed companies to look at
ASX is home to a lot of quality emerging companies in the gold space. This report profiles many of them, including articles we’ve written on a number of promising companies in our flagship investor action report, Stocks Down Under. Who will become the next Norther Star, Evolution Mining or Saracen?
A wide range of valuations
Many emerging gold producers and developers on ASX are trading at a low valuation in terms of their Enterprise Value per Resource ounce. With some of these companies likely to become producers over the next few years the astute investor who does their homework may be able to profit not just from gold’s re-rating but also the re-rating at the mine/project level.