New Delhi: Gold and silver miners’ shares, rather than the metals themselves may offer investors the most attractive way to participate in the current precious‑metals rally, a report said on Wednesday.
The report from Rational Equity Asset Management said miners are generating double‑digit free cash flow yields even at flat metal prices, supported by stronger balance sheets, healthy cash generation and limited new supply.
The report argued the sector still trades below its decade‑average valuation, and the disconnect between the value of the metals and the companies that produce them could allow mining equities to outperform bullion.
For Indian investors, gold has traditionally been held through physical bullion and ETFs. However, physical metal alone lacks yield and operating leverage.
Global gold mining equities offer additional benefits through capital growth, dividends and buybacks, the report noted.
Further, Indian investors benefit from a dual compounding effect as global precious metal rallies combined with structural rupee adjustments historically enhance overall INR-denominated returns.
The report said that Rs 1 lakh invested in 24 karat physical gold at 2023 breakout would have become Rs 2,30,000. In Indian gold ETFs, the investment would have become Rs 2,53,000 and in global gold mining equities (GDX, INR‑converted), it would have become Rs 3,77,000.
Gold ETFs, despite record inflows, still account for only about 0.3 per cent of India’s gold stock. This fundamental gap is structurally the crucial opportunity available to an Indian investor, as mining equities offer upside from higher gold prices, dividends and buybacks albeit with higher equity-like volatility.
Rising US real yields, growing fiscal pressures and the possibility of a weaker US dollar could further strengthen gold’s role as a reserve asset.
China’s central bank made its largest monthly purchase in 32 months in July, precisely as spot gold posted its steepest monthly decline since 2008.
(IANS)
