The price of gold rebounded strongly last week following Federal Reserve Chairman Bernanke’s comments on further monetary easing. Gold for immediate delivery ended the week up by 5.6%, at $1,292 per ounce.
Of course, the only practical way for most private investors to invest in gold is through exchange-traded funds. The largest gold ETF, the $38bn SPDR Gold Trust (NYSE: GLD.US), ended the week 4.2% higher at $124.13, while London-listed Gold Bullion Securities (LSE: GBS) jumped 5.6% to end the week at $123.40. So far this year, shareholders of Gold Bullion Securities have seen the value of their holdings fall by 23.1%, while the value of SPDR Gold Trust shares has fallen by 23.9%.
Gold’s big movers
Many gold miners saw their share prices stabilise and rebound last week, and a number of companies managed to outperform the price of gold:
Randgold Resources Limited (LSE: RRS) rose 6.6% to 4,393p last week. Although the firm’s shares remain down by 10% over the last month, Randgold’s rebound outpaced the gain in the gold price and highlights the underlying quality of the firm’s reserves, which have always been valued based on a gold price of $1,000 per ounce. Randgold’s annual gold production is expected to grow to 1.2m ounces by 2015, as its giant Kibali mine ramps up.
Highland Gold Mining (LSE: HGM) climbed 12.6% to 59p last week as the firm’s positive test production update from its Belaya Gora processing plant coincided with a rise in the price of gold. Belaya Gora is expected to produce 30,000 to 35,000 ounces of gold this year, rising to between 74,000 and 110,000 ounces per year over the life of the Novoshirokinskoye mine.
Fresnillo (LSE: FRES) gained 9.9% to 981p last week. The Mexican-based firm may be best known as a silver miner, but it produced 117,500 ounces of gold in the first quarter of this year alone and expected to produce 490,000 attributable ounces of gold in 2013, giving it a significant level of exposure to the price of gold. Fresnillo’s cash costs per ounce for gold production ranged from $481 to $618 per ounce last year, suggesting that the firm is well positioned to cope with a weaker gold price.
Shares vs commodities
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> Roland does not own shares in any of the companies mentioned in this article.
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