Are precious metals really that precious?
Gold and silver hauls took out the list of big-ticket items in self-managed superannuation funds, according to SuperConcepts, prompting Money Management to look into the performance of metals and mining in Australia and see whether these precious metals are really all that precious.
The S&P ASX 300 Metals and Mining Index is comprised of companies classified as being in the metals and mining industry, which includes producers of aluminium, gold steel, previous metals and minerals like BHP Group, Rio Tinto, Alumina and Newcrest Mining.
It returned 6.50 per cent and the S&P ASX All Ordinaries Gold (Sub Industry) index returned 4.98 per cent. Both indices massively outperformed the S&P ASX 300, which returned -1.03 per cent for the same time period.
The commodity and energy sector returned -5.47 per cent for the year to 30 November 2018, which although encompasses funds investing in the likes of natural resources and agriculture, the Perth Mint – Gold fund returned -1.02 per cent, which puts it just outside the top quartile of the sector, and still above the regularly used S&P ASX 300 index.
BetaShares’ Gold Bullion ETF, which invests its assets into the purchase of physical gold bullion (gold bars) returned -6.32 per cent, and VanEck’s Vectors Gold Miners ETF, which aims to track the NYSE Arca Gold Miners Index, returned -10.74 per cent.
Select Baker’s steel Gold fund returned -11.03 per cent and BetaShares’ Global Gold Miners ETF returned -17.12 per cent.
So, while the Aussie metals and mining index and All Ordinaries Gold index returned above what the S&P ASX 300 would, the actual funds themselves didn’t do so well.
But, while the year didn’t see majorly positive returns, SuperConcepts analyst, Phil LaGreca, highlighted that gold and silver were considered safe options as they tended to retain value in economic downturns and over the longer-term.
“They can be volatile in the short term but gold and silver have always maintained their value in the long term because they are tangible unlike shares,” he said.
“Over the past 16 years gold has increased over 260% in value and silver increased over 220% in value, so investors have experienced good capital gains from these assets.”
The chart below tracks the performance of the S&P ASX 300 Metals and Mining Index and the S&P ASX All Ordinaries Gold (Sub Industry) Index for the 12 months to 30 November 2018.
AUTHOR
Anastasia Santoreneos
Recommended for you
Clime Investment Management has faced shareholder backlash around “unsatisfactory” financial results and is enacting cost reductions to return the business to profitability by Q1 2025.
Amid a growing appetite for alternatives, investment executives have shared questions advisers should consider when selecting a private markets product compared to their listed counterparts.
Chief executive Maria Lykouras is set to exit JBWere as the bank confirms it is “evolving” its operations for high-net-worth clients.
Bennelong Funds Management chief executive John Burke has told Money Management that the firm is seeking to invest in boutiques in two specific asset classes as it identifies gaps in its product range.
