EVN advanced +3.8% on Wednesday as gold edged back above $US1950. Investors who look at charts on a surface level will wonder why EVN is trading ~$1 below where it was the last time Gold traded at these levels, but bond yields are the difference between then and now, e.g. the Australian government has just sold $8bn worth of 31-year Australian Bonds with a 4.93% yield, the offering was 3.5x oversubscribed. Gold pays no yield and costs money to store, whereas government-backed cash is paying almost 5% for the next 30 years! That cash alternative for all investments, from stocks to property, gold and even Bitcoin, is getting tougher. As a further example, $100 invested at 5% for 30 years will be worth $447 on duration, a solid risk-free rate of return, the relative appeal of gold reduces in that environment.
- We believe gold will trade higher through 2024/5, making EVN an attractive investment around $3.50.
MM remains long and bullish towards EVN
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