Gold made solid gains last week, despite news that high-profile gold investors John Paulson and George Soros both sold substantial parts of their gold ETF holdings during the last quarter. The price of spot gold ended the week up by 3.8% at $1,376/oz, its highest level since the middle of June. However, new figures from the World Gold Council showed that global gold demand dropped to a four-year low during the last quarter, due to record selling from gold ETFs, and a fall in central bank gold-buying.
The only practical way for most private investors to invest in gold is through exchange-traded funds. The largest gold ETF, the $39bn SPDR Gold Trust (NYSE: GLD.US), ended last week 2.4% higher at $132.58, while London-listed Gold Bullion Securities (LSE: GBS) climbed 2.8% to end the week at $131.75. So far this year, shareholders of Gold Bullion Securities have seen the value of their holdings fall by 16%, while the value of SPDR Gold Trust shares has fallen by 18%.
Gold’s big movers
A sharp rise in gold prices usually triggers gains for gold miners, and last week was no different.
Petropavlovsk (LSE: POG) climbed 31% to 119p last week. The Russia-focused gold miner has fairly high cash costs and a substantial debt load, which mean that small gains in the gold price make a big difference to the firm’s potential profitability. Petropavlovsk reported a post-tax loss of $243m in 2012, with an average gold sale price of $1,670/oz. This may explain why the firm’s share price remains down by 67% this year, despite last week’s gains.
Condor Gold (LSE: CNR) gained 30% to 138p last week. Condor’s surging share price was helped by the price of gold, but may also have been boosted by news that a helicopter magnetic and radiometric survey of its 2.4Moz La India project in Nicaragua confirmed that “considerable exploration upside” exists for La India, according to the firm’s CEO, Mark Child.
Highland Gold Mining (LSE: HGM) rose 12.8% to 82p last week. In a trading statement published on Monday, the firm said that gold production had risen by 3.7% during the first half of the year, and that the group’s JORC compliant gold resources had risen by 25% to 16.5Moz, as a result of its purchase of the Kekura license and an independent resource audit update at Unkurtash.
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> Roland does not own shares in any of the companies mentioned in this article.