As the emerging market sell-off gathered pace and US economic data wavered last week, gold put on a solid display and ended the week 1.8% higher at $1,267 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 by 1.4% at $122.17, while London-listed Gold Bullion Securities (LSE: GBS) ended the week up 1.6% at $121.40. Over the last twelve months, shareholders of Gold Bullion Securities have seen the value of their holdings fall by 27.1%, while the value of SPDR Gold Trust shares has fallen by 23.5%.
Gold mining stocks were fairly quiet last week, despite gold’s strength, but a number of individual miners did manage to outperform the price of gold:
Highland Gold Mining (LSE: HGM) climbed 7.8% to 69p last week, continuing a run of strong momentum that has seen the Russia-based miner’s share price gain 22% over the last month. Despite this, the firm’s valuation remains modest, with a price-to-book ratio of approximately 0.5, and a forecast P/E rating of 8. Highland Gold didn’t report any new information last week, but the firm recently provided a trading update showing that gold production rose by 8% to a new record of 233,696 ounces in 2013, matching the firm’s guidance.
Hochschild Mining (LSE: HOC) gained 4.9% to 162p last week, cementing a 21% gain over the last month. Hochschild, which mines both silver and gold at its operations in Argentina, Peru and Mexico, recently raised $350m of debt to fund the purchase of International Minerals Corporation. But despite the recent strong performance of Hochschild’s shares price, analysts are downbeat on the firm’s near-term prospects, forecasting a 12% fall in revenues and falling earnings in 2014, along with a 10% cut to the firm’s dividend, which currently offers a yield of less than 1%.
Polyus Gold International (LSE: PGIL) rose by 6.7% to 195p last week. The gains came after the firm reported 2013 production of 1.65m ounces, up 5% on 2012, and at the upper end of the firm’s guidance of 1.59-1.68m ounces. However, the weaker price of gold has forced Polyus to slow the pace of its growth plans, and production is expected to remain flat in 2014, leading to expectations that earnings per share will fall this year.