ASX gold shares could be a place to find safety and even positive returns. Certainly, there is significant volatility in share markets worldwide at the moment, but perhaps gold can be the antidote.
The global banking sector continues to see volatility, with Deutsche Bank being the latest bank to see investor uncertainty.
Gold has been a store of wealth for thousands of years and has tracked inflation over time.
For some reason, the yellow metal has managed to build a reputation of being a hedge against share market and other asset declines.
Indeed, being able to benefit from something going up when other assets go down could be a very useful strategy, if it works.
However, ASX gold mining shares can have similar sorts of risks to those of other commodities. So, I'd want to choose gold assets that seem relatively trustworthy in the face of all this uncertainty, like the two potential options below.
Evolution Mining Ltd (ASX: EVN)
Evolution Mining is an ASX gold mining share that operates five wholly-owned mines: Cowal in New South Wales, Mungari in Western Australia, Mt Rawdon and Ernest Henry in Queensland, and Red Lake in Ontario, Canada.
What investors may notice about that list is that all of the mines are located in dependable countries where there are high levels of trust in mining and taxation laws, as well as a strong belief in capitalism. In other words, I like the jurisdictions where Evolution Mining's mines are located.
The business is expecting to significantly increase its gold production, with the company projecting a 25% increase between FY22 to FY24. In FY24, Evolution could produce 800,000 ounces of gold. In the first half of FY23, it made around US$330 million of operating mine cash flow.
It also has exposure to copper through its Ernest Henry operations.
In FY24, the ASX gold share is expected to generate earnings per share (EPS) of $2.95 and pay annual dividends of 9.5 cents per share. That means the current Evolution Mining share price is valued at under 12x FY24's estimated earnings with a potential grossed-up dividend yield of 4.6%.
Global X Physical Gold ETF (ASX: GOLD)
If investors want to try to avoid exposure to mining risks, then I think I'd want to choose an exchange-traded fund (ETF) like this one – it's backed by physical gold. Each physical bar is segregated, individually identified, and allocated.
The ETF comes with an annual management cost of 0.40%. The physical gold bullion is held in the vault(s) of the bank of JPMorgan Chase in London. This vault is audited twice a year, with the auditor's reports made available for investors to inspect.
ETF's unit price has risen nicely over the past decade, but it's impossible to say what the value of the ETF will do in the future.
