Gold tends to hold strong during inflationary times and that means a period of robust financial performance ahead for Australia’s producers, according to resource analyst Gavin Wendt.

At the same time not-so-hard assets like cryptocurrency had fallen and there had been a sell-off of tech stocks, the MineLife founding director said.

“The scenario for gold to do well is typically when we have a situation of negative real interest rates like we have now, where the Fed is scrambling to put up rates but inflation is tracking well ahead of the underlying rates of interest rates increases,” he said.

“And typically, if we look back historically over the last three to four to five decades, gold does very well in those circumstances. So yes, gold tends to do well during inflationary times, it’s stored value.”

A third factor to be aware of was potential climate of lower economic growth – with economists starting to talk about ‘stagflation’, which is the coincidence of low economic growth with escalating inflation.

“…And during the 1970s, when we saw stagflation, gold performed really, really well,” Mr Wendt said.

Add the situation with China and Russia’s Ukraine invasion and there was a raft of influences driving gold.

“We’ve seen equities and currencies and a whole range of other investment classes, all falling significantly since the start of this year. Whereas gold in my mind has done its job,” Mr Wendt said.

Mr Wendt said looking at gold’s recent value in US dollar terms was a little misleading as the currency had performed so well – depressing the value of the commodities quoted in that currency.

The upward trend in terms of Australian dollar gold prices meant the nation’s producers should enjoy robust cash flow and margins, he said.

“And I think investors see value now in the gold sector. And so they’re looking at Australian gold equities that have the potential to outperform where the margins are,” he said.

Mr Wendt said he had noticed more money coming into the gold space in the last few months after a period when sector had underperformed relative to the rest of the market.

“We’re starting to see that in terms of the share price performances of some of our gold companies,” he said.

“They’re starting to move again, whereas probably over the previous 12 to 18 months, the share price performances were steady at best or negative. We’re starting to see that turn around.”