The price of gold for immediate delivery fell steadily to a low of $1,272 per ounce during the first half of last week, before recovering to end the week up by 0.15% at $1,315/oz. Gold’s continued to rise after Asian markets opened this morning, and was trading at $1,331/oz. at 8am.
Of course, 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 0.3% higher at $126.86, while London-listed Gold Bullion Securities (LSE: GBS) edged up by 0.15% to end the week at $126.65. So far this year, shareholders of Gold Bullion Securities have seen the value of their holdings fall by 20%, while the value of SPDR Gold Trust shares has fallen by 22%.
Gold’s big movers
Gold’s rebound seemed to help lift a number the share prices of a number of battered gold miners. Among the top risers were:
Aureus Mining (LSE: AUE) climbed 32% to 41p last week, helped by the late rebound in the gold price and by the company’s first-half results, which showed that progress on its 100%-owned New Liberty gold mine project in Liberia is continuing. At the end of June, the company had $53.9m in cash and cash equivalents and was awaiting approval for a project debt finance facility for the mine. Aureus completed a Definitive Feasibility Study earlier this year, showing that the mine would deliver an internal rate of return of 29% at a gold price of $1,400/oz., with an operating cash cost per ounce of $668.
African Barrick Gold (LSE: ABG) gained 12% to 128p as it continued its recent recovery from its 28 June low of 96p. The company didn’t disclose any new information last week, but the recent stabilisation of the gold price may be helping to support the firm’s share price, as it narrows the potential margin of loss between the firm’s all-in sustaining costs of $1,507/oz. and the current price of gold.
Polymetal International (LSE: POLY) ended last week up 9% at 716p, helped by the rising gold price, and perhaps by the admission of the company’s shares to the A1 list of the Moscow Stock Exchange (MICEX). An A1 listing is only available to large, well-established companies that comply with internationally recognised accounting standards, so shares with A1 listings are likely to be more attractive to Russian institutional investors.
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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