The price of gold for immediate delivery ranged between $1,359 and $1,416 per ounce last week, but ended the week virtually unchanged at $1,391 per ounce, helped by slightly disappointing US economic reports and the continued uncertainty over western intervention in Syria.
Of course, the only practical way for most private investors to invest in gold is through exchange-traded funds. The largest gold ETF, the $41bn SPDR Gold Trust (NYSE: GLD.US), ended last week down 1% at $134.15, while London-listed Gold Bullion Securities (LSE: GBS) ended the week down 1% at $133.58. So far this year, shareholders of Gold Bullion Securities have seen the value of their holdings fall by 16.0%, while the value of SPDR Gold Trust shares has fallen by 17.5%.
Gold’s big movers
Despite gold’s flat performance last week, several gold miners managed to decisively outperform gold.
SolGold (LSE: SOLG) climbed 41% to 13.75p last week as investors welcomed news that the company had begun drilling at its 5000-hectare Cascabel Project in northern Ecuador. The firm’s share price has risen steadily since 23 August, when the Ecuadorean Environment Ministry granted the firm a licence allowing it to begin drilling. SolGold recently increased its stake in ENSA, the Ecuadorean company that owns the Cascabel concession, from 30% – 50%, and has the right to further increase its ownership of ENSA to a maximum of 85%. Initial drilling results are expected before the end of September.
Hochschild Mining (LSE: HOC) ended last week up by 11.4% to 285.2p. The FTSE 250-listed gold and silver producer owns mines in South America and has seen its share price fall by 41% this year as gold and silver have weakened. Hochschild is expected to report a full-year loss of six cents per share for 2013, before returning to profit in 2014, but the firm has $275m in cash and has maintained its dividend. At today’s price of 280p, Hochschild shares offer a prospective yield of 1.1%.
Centamin (LSE: CEY) added to recent gains and rose 7.4% to 46.1p last week. The Egyptian gold miner’s share price has risen by 35% over the last month, but investing in the company remains high risk; the legal validity of its mining licence for its Sukari mine — the company’s only significant asset — remains under appeal. The court hearing for the appeal is due to start on September 24, but a final decision is not expected until 2014.
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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