All that glitters … pick your gold coin wisely

HAVING failed to react to inflation and geopolitical tensions, bullion is having its moment in the golden sun.

The gold price has been flirting with $US2000 an ounce level, near the record $US2039/oz a year ago.

The gold price is meant to thrive in times of high inflation it also tends to move inversely to interest rates, which the central banks have been increasing to counter inflation. Go figure.

Gold is also a safe harbour and has been rising on the prospect of financial strife. Let’s settle for the Dennis Denuto explanation: it’s all about the vibe, and banking failures mean the vibe is fear.

Should investors go for gold – and how?

Despite the heady price, local miners have failed to hit the spot because of ratcheting input costs, notably for labour and energy. Some miners have disappointed for other operational or management reasons, or because they have been overleveraged.

But the gold bulls’ vibe is reflected in increasing M&A activity as the miners strive for expanded lower cost production to take advantage of the firming price. US giant Newmont Corp last week lobbed an offer for the biggest ASX-listed producer, Newcrest Mining (ASX:NCM), while this week Ramelius Resources (RMS) said it would buy Breaker Resources (BRB) in an agreed $130m scrip deal.

While Breaker might be gobbled up, there are dozens of other ASX gold plays, so take your pick (and shovel).

Among the producers, broker Canaccord ranks the $1.7bn market cap Capricorn Metals (CMM) as the “clear standout”.

The firm expects emerging producer Bellevue Gold (BGL) to manage an average 181,000 ounces of gold per annum – and 200,000 over the first five years – from its eponymous project in WA’s northern goldfields.

With 3.1 million ounces of gold grading an average 9.9 grams a tonne, Bellevue is touted as one of the highestgrade gold development projects in the world. And Canaccord reckons it’s a takeover prospect.

When picking the golden ASX opportunities from the fool’s gold is all too much, pundits can opt for the simplicity of gold exchangetraded funds (ETFs). These low-cost vehicles simply track the bullion price, without the risks posed by factors such as soaring costs and management stuff-ups. Investors also miss out on the leverage from good operational performance and the joy of their company finding a hot new deposit.

One example of the stayin-the-armchair approach is the currency-hedged Betashares Gold Bullion ETF (QAU), or Global X’s Physical Gold ETF (GOLD).

Another option is to hedge bets with Betashares Global Gold Miners ETF (MNRS),

which consists of 45 of the world’s greatest gold diggers.

Intriguingly, Global X reports that while investors have poured into US and European gold ETFs, Australian gold ETFs have seen outflows. This implies local punters are using the high gold price to take profits. This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions