PohKong ($0.97) - a beautiful breakout above $0.90 today 

Are you better off investing in gold than in a gold proxy such as Poh Kong? 

To answer this question, I compared the gain from gold compared to Poh Kong based on the short-term situation ie 2019 to 2022.

From 4 Jan 2019 to 26 Aug 2022, gold appreciated by 8.5 %. If you have invested in Poh Kong, your compounded annual total gain (capital gain + dividends) would be 14%. 

On such a basis there is no advantage to investing in gold.

For more insights on Bursa gold proxies, refer to “Are there Bursa proxies for gold?”

From 2001 to 2023, there is a 0.74 correlation between the revenue of Poh Kong and the price of gold. This meant that about half of the changes in Poh Kong’s revenue can be explained by changes in the price of gold.

Gold prices have been on an uptrend over the past couple of months. I am not sure whether it will continue to go up further. But I am sure that Poh Kong will have better business results in the short term to mid-term.

The interesting thing is that from a short term (6 months) perspective, there were more than 80% correlation between Poh Kong share price and gold prices during periods of gold price uptrends.

For the investor, there are 2 questions when looking at Poh Kong

• Will gold prices will continue to go up?
• Have the share price fully captured all the gold price increase?

For more insight go to “Is Poh Kong a proxy for gold?” 

Are Bursa jewellery retailers gold proxies?

A gold proxy is a stock whose stock price moves in tandem with gold prices.

The rationale for investing in a gold proxy rather than directly in gold is the belief that gold price changes have some "multiplier" effect on the proxy. In other words, you can make more. Of course, the risk could be higher.

In my earlier analysis of Bursa gold jewellers covering 2007 to 2021, I found that the correlation between gold prices and stock prices was not significant.

I have now updated the analysis to cover till 2024 as gold prices have been on an uptrend over the past 2 years.

If you want to know more about the latest findings, come join the podcast tonight 

Date: 25 Mar 2025 (Tue)

Time: 8:30pm

Link: https://www.facebook.com/xifu.my