Thursday has brought with it fresh rafts of awful economic data from across the globe. Equity markets have remained firmly in the green, though, with the FTSE 100 last up and approaching the 5,800-point marker. The state of said data, though, leads me to worry that another stock market crash could be lurking around the corner.
First came disastrous Purchasing Managers’ Index (or PMI) numbers from the UK and the eurozone. Then came some staggeringly-bad PMI numbers from the States. To complete the set came staggering jobless claims numbers from the US, showing that more than 25m Americans have filed for unemployment in the past month.
This data, like much before it, was much worse than analysts had been expecting. Share markets could start to crash again if this trend continues.
Protect yourself from another stock market crash
It seems like having exposure to some safe-haven assets could prove a good idea, then. Investors don’t only have to contend with the severe social, economic, and political costs of the Covid-19 pandemic. They also need to be prepared for a escalation in hostilities between the US and Iran, a scenario that would turbocharge demand for less-risky assets.
One great way to do this is to buy shares in gold-producing stocks, I reckon, shares that could rocket while everything else crashes. Centamin (LSE: CEY) is one such company I’d happily snap up because of its brilliant value for money. At current prices of 160p per share, it carries an undemanding forward price-to-earnings (P/E) multiple of 14.2 times.
A final reason why the FTSE 250 stock is such a great buy today is its dividend yield. Right now investors can tap into a chunky figure of 3.6%. Compare this to investing in, say, a gold-backed exchange-traded fund (ETF) or pieces of physical metal. These particular assets offer no dividend at all!
Amid signs of fresh macroeconomic and geopolitical damage, bullion prices have found themselves back on the charge again. Gold moved back above $1,750 per ounce again to fresh seven-year highs. Analysts are beginning to believe, too that this is just the beginning.
Take the boffins at Bank of America-Merryll Lynch, for example. A fresh report from the bank expects that the yellow metal will almost double to reach $3,000 an ounce by October 2021. Such a scenario would crash the current record of $1,920 per ounce punched almost a decade ago.
Praising the metal as “the ultimate store of value” in these troubled times, Bank of America continued that “as economic output contracts sharply, fiscal outlays surge, and central bank balance sheets double, fiat currencies could come under pressure.”
It pays for individuals to always have gold exposure in their investment portfolio in some way, shape or form. Financial market volatility is nothing new, after all. And buying the likes of Centamin is a particularly good idea to protect your wealth from another share market crash.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.