James Carthew: The obvious – but volatile – beneficiary of fearful markets
Golden Prospect Precious Metals is soaring as investors grow nervous over uncertain market conditions, but it is prone to volatile share price moves.
The gold price is marching higher again, and for good reason. The mixed messaging coming from the US about long bond yields and interest rates, along with its failure to agree a lasting peace deal with Iran, points to more dollar weakness and higher for longer inflation. Fleeing to the perceived safety of gold is perhaps a natural reaction in this environment.
In the investment trust world, the obvious beneficiary of this is Golden Prospect Precious Metals (GPM). Its share price is a smidgen below its all-time high, helped by a narrower discount – currently around 12%.
Last year was a banner period for GPM – a 165% shareholder return made it the best-performing of all investment companies – but it has been in the news a fair bit this year, too. In March, the management team of Keith Watson and Robert Crayfourd surprised investors by resigning from Manulife-owned CQS. GPM’s share price fell sharply on the day, and the board later served notice on CQS.
The duo has since resurfaced at Tufton and the other two trusts that they managed – CQS Natural Resources Growth and Income (CYN) and Geiger Counter (GCL) – have also confirmed that they would be heading that way.
However, GPM chose a different path. In July, it announced it would be appointing Baker Steel as manager, with Mark Burridge and Trevor Steel taking on responsibility… read more here