A greater focus on energy security and net zero targets means that Yellow Cake’s financial future is bright as demand for uranium rises. And because aluminum is widely used in renewable infrastructure, our exchange-traded commodity (ETC) on WisdomTree Aluminum could yield positive returns for years to come.
The performance of all four holdings is, of course, related to the economic outlook. As a result, share prices are set to remain relatively volatile in the short term as a possible economic slowdown occurs.
However, they offer the potential for long-term returns on capital that are likely to remain above inflation. As a result, investors should fight their natural urge to seek stability and instead purchase commodity stocks if they aim to maintain or even grow the value of their portfolios on a post-inflationary basis.
Questioner says: buy
Share price at closing: £14.58
Gold prices have also been quite volatile this year. After hitting over $2,000 (£1,620) per ounce in the first quarter, it fell to around $1,600 per ounce in the third quarter as rapidly rising US interest rates made income-generating assets relatively attractive. A tighter US monetary policy also strengthened the dollar and made gold more expensive for non-US-based investors, easing demand for the precious metal.
However, gold’s long history as a store of wealth during times of high inflation and its defensive properties during times of economic turmoil have bolstered its price in recent months. Indeed, the Wealth Keeper has delivered a 14% gain for our portfolio since it was added in April last year.
According to Questor, gold’s appeal is likely to increase in the coming months as the full impact of fast-paced monetary policy tightening on the economy’s growth rate begins to take hold. In addition, a possible slowdown in the rate of increase in interest rates in the medium term could increase demand for precious metals, albeit with surprises, as the increasing relative attractiveness of income-earning assets gradually diminishes.
Therefore, gold remains an important portfolio asset that is likely to offer significant inflation protection over the long term.
Read the latest Questor column at telegram.co.uk every Sunday, Tuesday, Wednesday, Thursday and Friday from 6 am.
Read Questor investment rules before applying our tips.