Article

Gold please… frankincense is a bit myrrh!

16 December 2021
Joanna Smith
Joanna Smith
Product Director
Gold please… frankincense is a bit myrrh!
Frankfurt, Germany

Persistently high inflation and caution from central banks are likely to drive real interest rates further negative. This is an environment that is supportive of the gold price.

Gold has historically been heralded as a ‘safe haven’ asset and a ‘hedge’ on inflation. Owning gold mining companies gives exposure to a rising gold price but also offers the potential for capital appreciation and dividends. 

Looking at the 12-month forward PE of gold mining companies relative to global equities over a 30-year period, the gold miners look cheap.

A gift to equity investors from the kings?

Figure 1. Gold stocks appear cheap based on 12-month forward PE relatives

Source: Refinitiv. World Datasteam Gold Mining equities relative to World Datastream Market

Count down to Christmas with our festive charts as we publish a new piece each day. Recognise the images that feature on our calendar windows? Each corresponds to a city where an Invesco office is based.

Inflation insights Return to calendar homepage

Related insights

  • The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.

  • All data is provided as at the dates shown, sourced from Invesco unless otherwise stated.

    When using an external link you will be leaving the Invesco website. Any views and opinions expressed subsequently are not those of Invesco.

    This document is marketing material and is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell securities.

    Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals, they are subject to change without notice and are not to be construed as investment advice.