Gold mining stocks offer safe haven for tariff-wary investors
Several companies on the local bourse have lately been taking a hit from the United States government’s latest tariff impositions—but not gold mining stocks.
Year-to-date, the Philippine Stock Exchange’s mining and oil subsector has gained by as much as 29 percent, according to Peter Garnace, Unicapital Securities Inc. equity research analyst.
This is largely due to buoyant prices of gold mining firms.
On the contrary, the industrial index, which includes companies that have a strong overseas presence like Jollibee Foods Corp. and Emperador Inc., has so far declined by around 7 percent. These companies have expressed some concern over the impact of US President Donald Trump’s “Liberation Day” tariffs on their supply chains.
Garnace told the Inquirer on Wednesday that precious metals would “continue to be attractive safe-haven assets, with gold prices likely to remain elevated in the near term amid prospects of rate cuts, global trade tensions and macroeconomic uncertainties.”
Unlike other assets like stocks and bonds, gold is typically seen as a hedge against global uncertainties—macroeconomic pressures and geopolitical tensions—due to its historical reputation as a safe-haven asset and storer of value, said Juan Paolo Colet, managing director at China Bank Capital Corp.
Gold prices also move independently of other asset classes, including the stock market. A decline in other assets may lead to higher demand for gold.
Although prices fell by as much as 2.2 percent to $3,308.81 an ounce on Tuesday, the precious metal surged to an all-time high of $3,500 within the day, according to a Reuters report.
“We expect gold prices to remain elevated in the short term, supported by persistent global economic uncertainties and heightened demand for safe-haven assets,” Garnace said.
For those who don’t really stock on gold bars at home, their next best option is to buy stocks of gold mining firms.
Not all that glitters
However, Colet warned that gold prices looked to be “overextended” and may see some correction in the coming days.
“For those looking to invest in gold stocks, we suggest waiting to buy at lower levels and to focus on gold miners with profitable operations, extensive mineral reserves and a credible development pipeline,” he said.
The “fundamentally sound” proxies for gold that investors may want to stock up on are Apex Mining Co. Inc. and OceanaGold (Philippines) Inc., both mainly engaged in the mining of the precious metal, Garnace noted.
He pointed out that Apex, whose stock price has more than doubled since the beginning of the year to P7.06 each, may also benefit from the recent upgrade of its ore reserve estimates.
Apex’s recent acquisition of the Amacan mine in Davao del Norte is likewise a source of optimism, as this is estimated to hold over 65 million tons of mineral resources.
OceanaGold, meanwhile, is seen to sustain high dividend yield. Since January, share price has risen by 15.4 percent to P16.50 each as of Wednesday afternoon.
At the same time, Garnace said base minerals like nickel and aluminum may be negatively impacted by global supply glut, which had recently weighed down prices.
Trump raised tariff on aluminum from 10 percent to 25 percent, which may likewise drag global demand, Garnace added.
