Last week’s gold market performance highlighted the volatility that investors can face when they invest in gold and gold miners. Ahead of last week’s Federal Reserve announcement on further quantitative easing, gold fell as low as $1,292 per ounce, before rebounding to a peak of $1,375 per ounce, when the Fed unexpectedly decided to continue its current programme of bond purchases. At the end of the week, the price of gold for immediate delivery was down 0.4% at $1,326 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 $41bn SPDR Gold Trust (NYSE: GLD.US), ended last week up 0.4% at $127.82, while London-listed Gold Bullion Securities (LSE: GBS) ended the week up 1.0% at $128.95. So far this year, shareholders of Gold Bullion Securities have seen the value of their holdings fall by 20.0%, while the value of SPDR Gold Trust shares has fallen by 21.6%.
Pan African Resources (LSE: PAF) climbed 16.7% to 15.5p last week, helped by a strong set of full-year results. The group announced a 38% increase in gold production to 130,493 ounces last year, and said that its earnings per share had risen by 39% to 2.6p per share, placing Pan African shares on a P/E of 6. Investors were also cheered by the firm’s decision to pay a final dividend of approximately 0.8p per share (at current exchange rates), giving the shares a yield of 5.3%.
Shanta Gold (LSE: SHG) rose 5.4% to 14.8p last week, helped by the stabilisation of the price of gold and perhaps by the share purchases made by two of the Tanzania-based firm’s directors. Directors dealings reports showed that the company’s non-executive chairman, Anthony Durrant, tripled his holding in the firm by purchasing £27,800 worth of shares last week, while non-executive director Paul Heber increased his stake to 0.1% of the company when he purchased a further £8,800 of shares.
African Barrick Gold (LSE: ABG) gained 2.2% to 156p last week. The company announced that it has appointed a new chief financial officer, Andrew Wray, who was formerly the Head of Corporate Development and Investor Relations and has been responsible for the development of the company’s recently-announced $185m cost-cutting programme.