Big dividends, spectacular growth, excellent value for money! I think this gold stock is a great buy in July
Investor confidence remains fragile as the coronavirus crisis continues. This is a problem that also threatens to keep the nerves of the market going for quite some time. But that doesn’t mean stock buyers should retreat to their bunkers. There are still many brilliant and wealth-creating UK stocks that deserve special attention today.
Buying gold stocks, for example, is a great idea as precious metal prices continue to soar. Bullion hit new eight-year highs above $ 1,800 an ounce on Wednesday as new foreclosure measures were introduced in the United States and Australia, raising further concerns about the strength of the recovery economic.
With the global Covid-19 infection rate continuing to rise, we can expect further investor tension, a scenario that is expected to continue to fuel demand for gold. But this is not the only social, macroeconomic or geopolitical problem that risks keeping nerves sharp and buying precious metals well.
Diplomatic tensions between the United States and China continue to rise, casting doubts on last year’s progress in trade negotiations. Quarrels over tariffs have also accelerated elsewhere in recent weeks and threaten to degrade relations between Washington and European capitals and put more pressure on an economic rebound.
Gold should stay well bought ahead of what promises to be a turbulent US presidential election as well, while rampant central bank money printing should help gold sales as well.
Gold investment is booming
New data from the World Gold Council on Exchange Traded Fund (ETF) inflows illustrates the strength of demand for gold right now.
Gold-backed ETFs recorded their seventh consecutive month of positive flows in June, according to the organization. Last month, these investment products absorbed a whopping 104 tonnes of material, a result that brought total inputs in the first half of 2020 to 734 tonnes.
This breaks the record for the first half of the year, which was broken at the height of the financial crisis in 2009. Subsequently, gold-backed ETFs recorded inflows of 646 tonnes for a total US dollar value of $ 23 billion. The value of collections in the first half of 2020 by comparison was $ 39.5 billion.
These numbers are clearly quite staggering. And the WGC put them in context by commenting that the inflows in the six months through June 2020 were “significantly higher than the record multi-decade central bank net purchases seen in 2018 and 2019, and could absorb a comparable amount of around 45% of global gold production in the first half of 2020. “
Delicious dividends at a low price
In this context, I think buying shares in the London-listed digger Centamin is a great idea. It is a stock that offers a lot for growth, the dividend and value investors to get excited about.
Analysts in the city expect the North African-focused mining giant to see a 112% improvement in annual profits in 2020. This allows it to trade a forward P / E ratio of around 14 times, and supports expectations of another exceptional annual dividend to boot. Therefore, investors can enjoy a powerful 5.2% return.
The Centamin share price has climbed 49% since the start of 2020. And I expect it to continue to explode for some time, given the likelihood of a single prolonged hangover from Covid-19. I think this FTSE 250 venture is a great way to play on the soaring price of gold today.