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Are gold miners different from gold jewellers as gold proxies?
I was looking for Bursa gold proxies to invest in by comparing the returns from investing in gold vs investing in a number of Bursa gold proxies.
From 4 Jan 2019 to 26 Aug 2022, gold appreciated by 8.5 % CAGR. The returns for the 4 Bursa companies for the same period are shown in the table. Refer to https://i.postimg.cc/8k0dP5ST/Table-4.png
You can see that only Bahvest return was lower than that for gold. Bahvest is a gold miner whereas the other 3 are gold jewellers.
In the context of proxies for gold, gold miners are typically considered a more direct and volatile proxy for the price of gold. When the price of gold rises, the profitability of gold mining companies often increases significantly. However, their performance can also be affected by factors specific to their operations.
Gold jewellery companies, on the other hand, are influenced by both the price of gold and consumer demand for jewellery. Their financial performance can be influenced by factors such as fashion trends, and marketing strategies. Their performance may not always correlate as closely with changes in the gold price, making them a less direct proxy for gold.
Moral of the story? Invest in the Bursa gold jewellers rather than gold.
What about Bornoil? The company had announced its gold reserves in May 2022. But there was no reporting of this being in operations in its 2022 Annual Report. So until it gets gold out of the ground, you should not consider this a gold proxy.
