The price of gold traded in a range between $1,208 and $1,267 per ounce last week, but ended the week little changed, with gold for immediate delivery down just 0.4% at $1,221 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 2.2% higher at $118.09, while London-listed Gold Bullion Securities (LSE: GBS) dropped 2.6% to end the week at $116.90. So far this year, shareholders of Gold Bullion Securities have seen the value of their holdings fall by 27.1%, while the value of SPDR Gold Trust shares has fallen by 27.6%.
Gold’s big movers
The share prices of major gold miners began to stabilise last week, after gold’s most recent slide, and several companies managed to outperform the price of gold:
Centamin (LSE: CEY) climbed 14.6% to 35.7p last week. The Egyptian gold miner’s share price rose after Egypt’s President Morsi was deposed, on hopes that a change of leadership might bring to an end the current legal challenge to the validity of the firm’s mining concession. Centamin’s mining licence was only disputed after the election of President Morsi, and some investors believe that the legal challenge may have been politically motivated — and hence may be withdrawn now that the political environment has changed.
African Barrick Gold (LSE: ABG) gained 5.5% to 105p last week, although the firm, which is one of the five largest gold producers in Africa, remains down by 77% so far this year. African Barrick benefited from a rating upgrade to ‘buy’ from analysts at Nomura last week, and has recently received a number of other positive ratings from financial analysts, who believe the stock is trading below its intrinsic value.
Polymetal International (LSE: POLY) rose 2.2% to 472p last week. The Russian gold miner, which was ejected from the FTSE 100 in the June reshuffle, is down 61% so far this year due to concerns about its profitability at lower gold prices. Like African Barrick, Polymetal was upgraded by Nomura last week, and major investor Morgan Stanley increased its stake in the firm from 3.26%, to more than 4%, last week.
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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