Investment summary

The gold price has increased by 11% over the past 12 months but is now 20% below its high and has shown greater volatility in recent months. The rise over the last two to three years appears to reflect investor fears over other financial assets and of a return to higher levels of inflation. In recent months that fear has abated and, with it, the gold price. If financial markets are to be more settled, fundamental non-investment demand for gold will need to play a larger part in setting the price. But that remains a big ‘if’, amid concerns over sovereign debt and low growth. For Golden Prospect Precious Metals (GPM), fundamental value in stocks (already de-rated vs the gold price) seems the more certain support. Over 12 months GPM is down 30.0% and 31.9%, in terms of price and NAV total return. The Philadelphia Gold and Silver Index (sterling adjusted) is down 25.6%. Performance has seen a very strong improvement since New City Investment Managers (NCIM) took over the management of GPM, which can be seen in the three-year figures.

Last updated on 26/04/2012