The price of gold remained fairly stable last week, as the prospect of immediate military intervention in Syria faded. The price of gold for immediate delivery fell by just 0.3% and ended the week at $1,395 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 down 0.1% at $134.62, while London-listed Gold Bullion Securities (LSE: GBS) gained 0.1% to end the week at $134.61. 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
It was a quiet week for mining company news last week, but several gold producers made strong gains regardless:
African Barrick Gold (LSE: ABG) ended last week up 14.2% to 190p, an impressive gain, considering that the price of gold remained flat last week. One reason for the shares’ strong performance may be that investors are betting that the firm, helped by new chief executive Bradley Gordon, can close the profitability gap between African Barrick’s all-in-sustaining costs of around $1,500 per ounce, and the current gold price of around $1,400 per ounce.
Shanta Gold (LSE: SHG) gained 12% to 15.9p last week, following news that the East Africa-focused company had successfully restructured its current loan facilities. The new loans have an extended 36 month repayment period, a lower interest rate of Libor + 6.5%, and combine two separate facilities into one $45m facility, of which $33.75m is currently drawn. Shanta said that the new terms reflect the start of production at its New Luika gold mine and include a four month payment holiday.
Centamin (LSE: CEY) rose 9.6% to 43.6p last week, mostly following a sharp rise on Thursday, that may have been triggered as it became clear that the British parliament was unlikely to vote in favour of military intervention in Syria. Egypt also faces its own civil problems, which may be contributing to ongoing volatility in Centamin’s stock price; the company’s mining licence remains under challenge, and this is unlikely to be resolved while Egypt lacks an effective government.
Shares vs commodities
Shares in commodity companies have outperformed their underlying commodities many times over the last ten years, thanks to their ability to magnify their gains through successful development of new resources. This free report from the Fool, “Ten Steps To Making A Million From The Market“ contains some excellent tips on identifying and investing in potential multibagger shares, including resource shares like gold miners. I strongly recommend that you click here and download it now, as it will only be available for a limited time.
> Roland does not own shares in any of the companies mentioned in this article.
