Is it time to make money with the GOLD RUSH? Mining stocks could offer great opportunities

Cereal, laundry detergent and 24-karat gold bars. This may not be the typical shopping list.

But in recent months, thousands of customers at US cash-and-carry giant Costco have put one-ounce gold bars in their carts.

According to Wells Fargo, a bank created to handle the cash flows from the 1849 gold rush, they spend as much as $200 million a month.

Hedge funds and central banks in China, Turkey and other countries are also buying, sending the metal’s price up 20 percent over the past six months to $2,360.

Gold seems to have taken over its age-old role as a safe haven and store of value.

The forecasts for further price increases are so optimistic that this latest gold rush seems like a brilliant opportunity.

BHP’s £31 billion bid for Anglo-American launched this week also signals the likelihood of more M&A fun in the metals mining industry.

Citigroup predicts the precious metal will “shine bright like a diamond,” rising to $3,000 within six to 18 months.

Goldman Sachs estimates a price of $2,700 by Christmas, although even at this level gold would still be below the record high of June 1980 in real terms. When the Soviets invaded Afghanistan, the price reached $850, the equivalent of $3,180 today.

These estimates are based on concerns about growing unrest in the Middle East – and on the view that inflation still needs to be suppressed, especially given the spiraling US national debt. Evy Hambro, co-manager of the BlackRock World Mining Trust and the BlackRock Gold and General Fund, highlights a shift in investor preferences.

He says: ‘People are looking for assets that offer an alternative to cash, and because it is now easier than ever to buy gold, the barriers to entry have been lowered.’

Kate Townsend of asset management firm IBOSS also says there is a demand for ‘long-term diversification against more traditional assets’.

If you’re considering diversifying into gold, be prepared for more price volatility this week – and be optimistic about the lack of returns. Gold does not provide income. Royal Mint has a range of coins and bars at prices starting from £90.52. These are VAT free and have an elegant Britannia design.

A share in a gold fund or trust may be less aesthetically attractive. But you won’t have to deal with the issue of insurance or storage.

Gold exchange traded funds (ETFs) hold gold on your behalf. Broker Interactive Investor recommends the iShares Physical Gold ETF in which I have a small amount of money.

Gold mining stocks may be worth a bet: the rise in the price of this metal means that the high production costs of these companies need to be covered.

Ole Hansen, head of commodity strategy at Saxo Bank, said: ‘Shares in gold mining companies are undervalued and offer potential for investment returns.’

Dan Boardman Weston, of BRI Wealth Management, said: ‘It seems increasingly likely that the gold price will remain high and this will feed through to higher incomes and higher profitability for listed gold miners. I prefer the VanEck Gold Miners ETF. This provides exposure to the larger gold miners, such as Newmont, Barrick Gold and Franco-Nevada, across a number of different geographies.”

Newmont is the world’s largest gold mining group. The country suffered losses in 2023, but this year it is expected to produce 6.9 million ounces of gold, compared to 5.5 million ounces last year.

If anything, gold’s revival should be a reason to assess your portfolio.

If you have money in the two capital protection trusts – Personal Assets and Ruffer – you are already exposed to gold. Their stakes are 12 percent and 8 percent respectively.

Ruffer’s performance has been poor, much to the chagrin of investors like me.

But I am hopeful that the trust’s focus on precious metals will reduce the discount, i.e. the gap between the stock and its net asset value (NAV), which is 7 percent.

A further boost could come from the trust’s recent investment in silver, which its managers say has “historically underperformed and subsequently outperformed gold.” Another precious metal you should consider adding to your shopping list? It seems like.