Gold hovered around the $1,270 per ounce level until Thursday last week, when a last-minute deal to extend the US debt ceiling triggered strong gains, leaving the price of gold for immediate delivery up by 3.4% at $1,321 per ounce by the end of the week.
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 2.4% at $126.85, while London-listed Gold Bullion Securities (LSE: GBS) ended the week up 3.1% at $126.68. So far this year, shareholders of Gold Bullion Securities have seen the value of their holdings fall by 21.0%, while the value of SPDR Gold Trust shares has fallen by 22.3%.
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:
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Centamin (LSE: CEY) ended the week up by 10.4% at 51.2p. Although the company’s mining licence remains subject to a legal challenge, there is speculation that the original legal case was politically motivated and could be withdrawn by Egypt’s new regime. In the meantime, Centamin’s recent third-quarter production report confirmed that the firm expects to exceed its production target of 320,000 ounces of gold in 2013.
Pan African Resources (LSE: PAF) closed last week up by 6.3% to 16.5p, after the firm issued a statement regarding media reports that it is in negotiations to purchase an interest in the Navachab gold mine in Namibia, which is owned by AngloGold Ashanti. Pan African said that “there can be no certainty that such participation will result in any transaction relating to Navachab”, but did not deny the story, giving it sufficient credibility to attract investors’ interest.
Polymetal International (LSE: POLY) gained 5.9% to 601p last week, after the company reported record quarterly production of 413,000 ounces, up by 30% from the same period last year. Polymetal said that the company’s net debt had fallen by $112m to $1.18bn during the quarter, thanks to strong operating cash flows generated by production growth and the reduction of its stockpiles. The company expects to meet its 2013 production target of 1.2Moz and expects to produce 1.3Moz in 2014.
