3 Gold Shares Rising Strongly: Petropavlovsk PLC, Polymetal International PLC And Patagonia Gold plc

Petropavlovsk PLC (LON:POG), Polymetal International PLC (LON:POLY) and Patagonia Gold plc (LON:PGD) all outperformed the price of gold last week.

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The price of gold continued to rise slowly last week and gold for immediate delivery ended the week up by 0.44%, at $1,296 per ounce. However, gold surged strongly on Sunday night after Asian markets opened, and was up 1.7% on Friday’s close at $1,317 per ounce, shortly after UK markets opened on Monday.

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 (NYSEMKT: GLD.US), ended last week 0.8% higher at $125.11, while London-listed Gold Bullion Securities (LSE: GBS) jumped 0.7% to end the week at $124.71. So far this year, shareholders of Gold Bullion Securities have seen the value of their holdings fall by 18.2%, while the value of SPDR Gold Trust shares has fallen by 23.3%.

Gold’s big movers

Gold dipped below $1,200 per ounce at the end of June, threatening the viability of several major gold miners. Since then, the yellow metal has recovered to around $1,300. As a result, several miners’ share prices rose dramatically last week, as investors reassessed the firms’ viability in the light of the gold price recovery:

Petropavlovsk (LSE: POG) climbed 24.3% to 92p, although the Russia-based gold miner’s share price remains down by 30% on the last month. Petropavlovsk currently has net debt of $1.16bn and is engaged in a major cost-cutting programme, and although nearly half of its gold sales this year have been hedged, its longer-term profitability remains at risk. The firm will pay its latest dividend using a mixture of cash and newly-issued shares, in order to preserve its cash reserves.

Polymetal International (LSE: POLY) gained 18% to 597p last week, although its share price remains down by 50% on the year to date. Although the firm is on-track to meet its 1.2 million ounce production guidance for 2013, its costs remain a concern for investors. A further update on the Russia-focused firm’s cost-cutting plans is expected on 29 July, when Polymetal publishes its second-quarter production results.

Patagonia Gold (LSE: PGD) rose 20% to 9.4p last week, and the firm’s share price rose by a further 17% this morning, after the Argentinian-focused firm reported that its Lomada heap leach project reached planned production levels at the end of June, and is now cash flow positive, leading the company to expect to report its first annual profit at the end of this year.

Shares vs commodities

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> Roland does not own shares in any of the companies mentioned in this article.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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