Confidence across UK share markets remains pretty shallow right now. It’s no surprise perhaps as the Covid-19 crisis rolls on and concerns over virus variants grow. Throw in fears over Brexit and resurgent global trade wars, and, well, there’s plenty to keep investor nerves on tenterhooks.
These aren’t issues that will stop me from continuing to invest in my Stocks and Shares ISA, however. Why? Well there are many defensive (and even counter-cyclical) UK shares that should deliver big returns however the economic recovery pans out in 2021.
A bright gold price outlook
Getting a slice of gold in 2021 is, in my opinion, an intelligent investing strategy in this climate. I’d do this by buying UK shares in companies that haul the shiny stuff out of the ground. This gives investors the chance to ride the gold price and to receive dividends in the process.
It’s possible that gold prices might slip this year should the Covid-19 economic recovery take off. But there are myriad reasons, like rising inflationary fears and a lumpy rebound in the global economy following the pandemic, that I think will keep demand for flight-to-safety assets like bullion quite robust.
There’s another reason why gold prices could receive an extra boost in 2021, too. As the World Gold Council notes, physical demand from China — the world’s number one gold market — is set to recover this year. This is built on expectations that government policy will boost the economic recovery there. It’s also because of stimulus measures to boost consumer activity in the Asian country.
A UK gold share on my radar
I personally would buy shares in FTSE 250-quoted Centamin (LSE: CEY) to make money with gold. As I say, buying gold-digging stocks gives one an opportunity to receive dividends as well as making money from a rising metal price. And the forward yield at this particular mining giant is quite spectacular. At 5%, this smashes the broader forward average of around 3% for UK shares.
That bright outlook for gold prices means that City analysts reckon annual earnings will soar at Centamin. A 17% year on year rise is pencilled in for 2021. And this leaves the company trading on a rock-bottom forward price-to-earnings growth (PEG) multiple of 0.8. Conventional thinking deems that any reading of 1 or below makes a UK share seriously attractive from a pure value perspective.
All this makes Centamin a great buy for the here and now, I believe. But don’t think that the business is just a top buy for these uncertain times. The business announced in December that it is undertaking work at its Sukari mine to generate 450,000 to 500,000 ounces of gold per year from 2024. It is also making steps to lop $100m off its gross annual cost base by that date. All things considered, I think this UK share could deliver titanic shareholder returns for years to come.