S&P/ASX 200 Index (ASX: XJO) gold stocks offer investors direct, and often amplified, exposure to movements in the gold price.
By that, I mean that shares in the big ASX gold miners often rise or fall by more than the corresponding rise or fall in the gold price. Though with a lag, as you'd expect.
That's because the all-in sustaining cost (AISC) for gold miners to dig the yellow metal up from the ground tends to remain relatively fixed, regardless of the gold price.
With that said, is investing in ASX 200 gold stocks a good way to deal with inflation?
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How have ASX 200 gold stocks fared amid soaring inflation?
Inflation reappeared with a vengeance across most of the developed world in the second quarter of 2022.
Australia was no exception, with inflation peaking at 7.8% in December 2022. While it came down in 2023, inflation in Australia and most developed nations remains above historic levels and higher than their central banks' targets today.
Gold, and by connection ASX 200 gold stocks, have counted among the beneficiaries of surging inflation.
That's thanks to gold's safe haven status, which tends to see increased demand for the yellow metal during times of uncertainty and economic malaise.
Here's what I mean.
On 28 October 2022, the gold price was trading for a bargain US$1,645 per ounce.
By 3 December 2023, that same ounce was trading for an all-time high of US$2,135, taking out the previous record of US$2,075 per ounce. That record was notched on 7 August 2020, in the early months of the global pandemic panic.
At the time of writing, bullion is fetching US$2,043 per ounce.
Using 28 October 2022 as our starting date, the ASX 200 has gained 10.6% since then.
Over that same time the S&P/ASX All Ordinaries Gold Index (ASX: XGD) – which also contains some smaller miners outside of ASX 200 gold stocks – has rocketed 42.8%.
As for some of the top Aussie gold producers, here's how these three have performed since 28 October 2022:
- Northern Star Resources Ltd (ASX: NST) shares are up 43.9%
- Ramelius Resources Ltd(ASX: RMS) shares are up 123.9%
- Evolution Mining Ltd (ASX: EVN) shares are up 83.0%
Now other factors, like rising geopolitical conflict, shouldn't be ignored when it comes to movements in the gold price.
But when it comes to dealing with inflation, these ASX 200 gold stocks have raced ahead of soaring consumer prices.
