Cluff Gold, Petropavlovsk and Randgold Resources are all in the spotlight.
The price of gold has come to life with a bang since the latest European Central Bank bond purchase programme and Federal Reserve QE programmes were announced. Early on Friday morning, spot gold was trading at around $1,771/oz, down slightly from a high of $1,779 earlier this week, but up by more than 9% over the last month.
Of course, the only practical way for most private investors to hold gold is through an ETF, and the $63bn SPDR Gold Trust ETF (NYSE: GLD.US) has risen by 1.8% over the last five trading days, as investors flock to gold to protect themselves from the devaluing effect of the Fed's latest money-printing operation. The London-listed Gold Bullion ETF (LSE: GBS), has also gained 1.8% since last Friday, and both funds are up by approximately 9% over the last month.
Miners outperforming gold
Many investors prefer to invest in gold mining stocks, rather than gold itself, as investing in miners offers the potential for leveraged gains on the price of gold.
Investors in Cluff Gold (LSE: CLF) have had a roller-coaster few years since the company was sold by its eponymous founder, but the company's share price has risen by 26% to 87.5p over the last 30 days, thanks to a rising gold price and the confirmation of a new deal with Samsung that will see Cluff Gold sell 1,929 ounces of gold per month to Samsung and receive a $20m credit line.
Meanwhile, FTSE 250 (MCX) miner Petropavlovsk (LSE: POG) has risen by 16% to 438p in the last five days, having recently benefited from several broker upgrades and the rising price of gold. Another plus for the company -- while gold prices continue to rise -- is that it recently reached the end of its gold price hedging programme and is fully exposed to current higher prices. Despite this, a heavy debt load and Russian risk premium continue to weigh on its share price -- its shares trade at just 5.8 times last year's earnings, giving a dividend yield of 4.2%; unusually high for a miner.
Finally, the largest pure gold miner in the FTSE 100 (UKX), Randgold Resources (LSE: RRS) (NASDAQ: GOLD.US), has risen by 21% to 7,440p over the last month, as investors piled back into gold -- despite Randgold's shares already trading on a price-to-earnings of 29 and offering a yield of just 0.3%. Randgold appears to be making solid progress with the development of its new mine in Kibali, Democratic Republic of Congo, strengthening its already impressive reputation for doing business in difficult African countries.
Shares vs commodities
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Further investment opportunities:
> Roland does not own any shares mentioned in this article.
