After dipping below $1,200 before Christmas, the price of gold made a solid move higher last week, and gold for immediate delivery ended the week up by 2.5% at around $1,237 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 $32bn SPDR Gold Trust (NYSE: GLD.US), ended last week up 2.9% at $119.29, while London-listed Gold Bullion Securities (LSE: GBS) ended the week up 2.9% at $119.20. Over the last 12 months, shareholders of Gold Bullion Securities have seen the value of their holdings fall by 25.0%, while the value of SPDR Gold Trust shares has fallen by 25.7%.
Kirkland Lake Gold (LSE: KGI) climbed 27% to 170p last week. The company’s stock price may have been boosted by the firmer price of gold, but last week’s gains also came ahead of this morning’s announcement that the firm is to explore strategic options for ‘the enhancement of shareholder value’, which could include ‘a potential sale of the company’s shares or assets’. The company also announced that its Deputy Chairman and former CEO, Brian Hinchcliffe, had resigned and its share price rose by 12% in the opening minutes of trading today, as investors bet on a possible sale.
Petropavlovsk (LSE: POG) shares rose 7% to 78p last week. Although the firm didn’t release any news relating to its gold mining business, it did confirm that a planned subscription by Chinese firm General Nice in Petropavlovsk’s part-owned iron ore mining business, IRC, had been partially completed, after several months of delay. The effect of the $26.5m subscription to IRC was to reduce Petropavlovsk’s holding in IRC from 51.16% to 48.70%.
African Barrick Gold (LSE: ABG) gained 7.5% to 201p last week, buoyed by the rising price of gold, which is of particular significance to African Barrick, whose current all-in sustaining cost of mining is $1,275 per ounce. This means that the firm is under significant pressure to make further cost savings in order to guarantee the viability of its mining operations, so fluctuations in the price of gold around the $1,200 level can have a significant impact on African Barrick’s share price.
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> Roland does not own shares in any of the companies mentioned in this article.