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The Greatland Gold share price is on a tear! Should I buy?

The Greatland Gold (LSE: GGP) share price has been on a tear over the past year. The stock is up more than 400% over the past 12 months. That makes the Greatland Gold share price one of the best performing investments on the London market.

The company has unveiled a series of exciting updates over the past year. These developments, coupled with the rising gold price, have substantially increased its long-term prospects.

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Greatland Gold share price

But after this performance, the Greatland Gold share price is starting to look expensive. Its currently changing hands at 8.6p, up from around 1.7p a year ago. At this price, the stock looks expensive compared to its history.

However, over the past 12 months, the business has gone from strength to strength. Most recently, the company has announced a stream of positive drill results from its exploration programme in Australia.

One of the most recent was an update on the Havieron deposit in the Paterson region of Western Australia. According to the company, the Havieron project is showing high-grade mineralisation results. For example, a 0.5m section yielded 159g of gold per tonne. Any mine with more than 100g is generally considered to be attractive.

This suggests the company is sitting on a highly valuable asset. The rising gold price has also supported the stock.

Rising gold price

Over the past few weeks, investors all over the world have rushed to buy the yellow metal. In times of uncertainty, gold can provide a safe haven. Evidence shows the gold price also offers a good hedge against inflation.

With central banks around the world rushing to print as much money as possible to offset the economic effects of the coronavirus crisis, some economists believe inflation is just around the corner. That could be great news for the gold price.

Still, Greatland Gold is only in its early stages of development. It could be some time before the company generates any revenue.

A risky asset

As such, it’s not very easy to place a value on the Greatland Gold share price at present. Until the company begins to produce and sell gold, it will remain dependent on the kindness of strangers to fund its operations.

If the price of gold continues to increase, that won’t be a problem. But if the price suddenly dives, the Greatland Gold share price could fall with it. Therefore, it’s clear this isn’t an investment for the faint-hearted.

However, if you’re looking for a way to invest in the gold price without buying gold directly, the Greatland Gold share price could be an excellent way to do so.

If owned as part of a well-diversified portfolio, the shares could provide a level of protection against further market uncertainty and inflation.

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Rupert Hargreaves 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.