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Old King 'Coal' is a merry old soul because coal prices surged

Goola Warden
Goola Warden1/20/2022 3:39 PM GMT+08  • 4 min read
Old King 'Coal' is a merry old soul because coal prices surged
Coal stocks may remain firm despite surging last year to outperform equities and bitcoin. DBS is the best proxy for inflation
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The two locally listed coal stocks gained more than bitcoin last year, and they were not as volatile. As can be seen from the price charts, they just rose and rose till they didn’t. At one point Geo Energy Resources was up 123%, ending the year up just shy of 80%. Golden Energy and Resources rose by 76% in 2021, although at one point in October, its share price was up 200%. These gains are more spectacular than bitcoin, which reportedly increased by just 62%.

We all know inflation is at a 40-year high and US interest rates are rising. As a result, bond yields and local currency bond yields and rates are also rising. The message to investors in the past few years is that renewables are good, and coal — especially coal — is not.

Nonetheless, DBS Private Bank’s chief investment office (CIO) says: “As hard commodities, the resource sector is a good inflation hedge as prices tend to rise when inflation is rising. Among these, we believe gold, metals, and oil should outperform the rest as there are additional catalysts which will continue to support prices.” No mention of coal, the dirty fuel.

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