The price of gold rose strongly on Tuesday last week, after the US government’s nonfarm payrolls employment report came in lower than expected and the dollar weakened. After starting the week at around $1,316 per ounce, gold for immediate delivery ended the week up by 2.5% at $1,350 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 last week up 2.5% at $130.46, while London-listed Gold Bullion Securities (LSE: GBS) ended the week up 1.9% at $129.54. So far this year, shareholders of Gold Bullion Securities have seen the value of their holdings fall by 20.4%, while the value of SPDR Gold Trust shares has fallen by 20.0%.
The sudden rise in the price of gold helped boost the share price of most gold miners, but several companies benefited from positive news flow and outperformed gold last week:
Petropavlovsk (LSE: POG) gained 10.0% to 81.8p last week, after confirming that gold production and mining costs are expected to remain within guidance this year, despite severe rains and widespread flooding in the Amur region of Russia, where the company’s mines are located. Petropavlovsk said that its average gold sale price was $1,495 per ounce during the last quarter, thanks to a hedging strategy that has provided a $157 per ounce benefit.
Fresnillo (LSE: FRES) climbed 5.4% to 1,037p last week after declaring a special dividend of $165m, or 22.39 US cents per share. This equates to around 13.8p and adds an additional 1.3% to the gold and silver miner’s yield for the current year, taking the firm’s trailing yield for the last 12 months to 4.1%. The special dividend also helps compensate for the recent cut to the firm’s interim dividend, which was reduced from 15.5 cents last year to 4.9 cents for the first half of 2013.
African Barrick Gold (LSE: ABG) gained 8.5% at 170.3p last week. The company announced the appointment of two new non-executive directors on Thursday, Steve Lucas and Rachel English, both of whom are expected to bring “a strong focus on cost control and operational efficiency”, according to African Barrick’s Chairman, Kelvin Dushnisky, which may help the firm address its all-in sustaining costs of $1,507 per ounce of gold — 11% above the current $1,350 market price.
