Greatland Gold (LSE: GGP) shares are shining right now. They’re up 40% in the last 12 months, and 99% over five years. Inevitably, they’re attracting a lot of attention.
Obviously, they’ve been given a great big shove by the gold price. It’s up 33% in the last 12 months to $2,914 an ounce, and 77% over five years. It’s been boosted by economic and geopolitical uncertainty, along with avid buying by the major central banks, notably China.
Established in 2005, Greatland Gold’s a London-listed mining company with gold and copper projects in Australia. In November, it scooped up Newmont’s ageing Telfer gold mine and remaining interest in the Havieron discovery for £380m. Greatland managing director Shaun Day hailed Havieron a “world class… generational” project.
Investors should approach the stock with extreme caution. Smaller mining companies can be highly volatile. Their shares can glister for a while, but don’t always turn into long-term gold.
Yet Greatland continues to power along. An investor who took the plunge at the start of the year will be up a remarkable 48%. That would have turned £10,000 into £14,800.
The sceptic in me says they got lucky. The Greatland Gold price chart’s very choppy, with significant peaks and troughs. Its shares surged 10% in the last week alone.
The four analysts offering one-year share price forecasts are optimistic though. They’ve produced a median target of 15.26p. If correct, that’s an increase of almost 65% from today’s 9.2p. Within those numbers there’s a broad range of views, from 7p to 19p. We’ll see how this pans out.
While gold’s traditionally viewed as a safe-haven asset, it’s not as simple as that. The price can be highly volatile. Plus there’s no yield. Its main role is to provide balance to a portfolio, providing a comfort blanket when stock markets plunge.
A strangely volatile safe haven
Today, investors are nervous, as President Trump embarks on the biggest reset of geopolitical relations I can remember, while threatened trade tariffs spook markets.
Most expect the Trumpian chaos to continue. But what if he does delivers some kind of peace in Ukraine? Or squeezes concessions out of key trading partners, drops tariff threats and declares victory?
The gold price spike might reverse. If it did, the Greatland Gold share price would inexorably follow. Investors could drift away. The shares may idle for years. I’m not saying that’s going to happen. I simply don’t know. But it’s a risk.
On the other hand, if interest rates finally show meaningful falls, that could boost gold, as the opportunity cost of holding this non-yielding asset shrinks.
Basically, it’s binary. I’d say Greatland Gold is worth considering, but only for investors who know exactly what they’re buying and can stand the risk. And only for a small part of their portfolio.
This post was originally published on Motley Fool
